Here's What Analysts Are Forecasting For VerticalScope Holdings Inc. (TSE:FORA) After Its Yearly Results

Shareholders might have noticed that VerticalScope Holdings Inc. (TSE:FORA) filed its full-year result this time last week. The early response was not positive, with shares down 6.5% to CA$7.00 in the past week. It was a respectable set of results; while revenues of US$80m were in line with analyst predictions, statutory losses were 15% smaller than expected, with VerticalScope Holdings losing US$1.16 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for VerticalScope Holdings

After the latest results, the consensus from VerticalScope Holdings' seven analysts is for revenues of US$76.5m in 2023, which would reflect a measurable 4.9% decline in sales compared to the last year of performance. Losses are predicted to fall substantially, shrinking 39% to US$0.71. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$80.3m and losses of US$0.74 per share in 2023. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.

There was no major change to the CA$12.86average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on VerticalScope Holdings, with the most bullish analyst valuing it at CA$18.05 and the most bearish at CA$9.49 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.9% by the end of 2023. This indicates a significant reduction from annual growth of 13% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.0% annually for the foreseeable future. It's pretty clear that VerticalScope Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target held steady at CA$12.86, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for VerticalScope Holdings going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for VerticalScope Holdings that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.