Earnings Update: Here's Why Analysts Just Lifted Their Sangoma Technologies Corporation (TSE:STC) Price Target To CA$9.03

As you might know, Sangoma Technologies Corporation (TSE:STC) recently reported its quarterly numbers. Sangoma Technologies reported revenues of US$61m, in line with expectations, but it unfortunately also reported (statutory) losses of US$0.04 per share, which were slightly larger than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sangoma Technologies after the latest results.

See our latest analysis for Sangoma Technologies

Taking into account the latest results, the consensus forecast from Sangoma Technologies' six analysts is for revenues of US$256.4m in 2025. This reflects a reasonable 2.5% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 95% to US$0.05. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$259.4m and losses of US$0.037 per share in 2025. While next year's revenue estimates held steady, there was also a sizeable expansion in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

Although the analysts are now forecasting higher losses, the average price target rose 14% to 7.895153699447201, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Sangoma Technologies, with the most bullish analyst valuing it at CA$12.96 and the most bearish at CA$7.54 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sangoma Technologies' past performance and to peers in the same industry. We would highlight that Sangoma Technologies' revenue growth is expected to slow, with the forecast 2.0% annualised growth rate until the end of 2025 being well below the historical 27% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.8% annually. Factoring in the forecast slowdown in growth, it seems obvious that Sangoma Technologies is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Sangoma Technologies. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Sangoma Technologies. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Sangoma Technologies going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for Sangoma Technologies that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.