Analysts Have Been Trimming Their Temenos AG (VTX:TEMN) Price Target After Its Latest Report

Shareholders in Temenos AG (VTX:TEMN) had a terrible week, as shares crashed 31% to CHF61.42 in the week since its latest yearly results. Revenues of US$1.0b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$1.85, missing estimates by 3.3%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Temenos

After the latest results, the 13 analysts covering Temenos are now predicting revenues of US$1.07b in 2024. If met, this would reflect a satisfactory 7.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 20% to US$2.25. In the lead-up to this report, the analysts had been modelling revenues of US$1.08b and earnings per share (EPS) of US$2.33 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The average price target fell 7.0% to CHF77.17, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. The most optimistic Temenos analyst has a price target of CHF101 per share, while the most pessimistic values it at CHF55.87. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. The analysts are definitely expecting Temenos' growth to accelerate, with the forecast 7.4% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 9.5% annually. So it's clear that despite the acceleration in growth, Temenos is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Temenos. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Temenos' revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Temenos' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Temenos. 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 Temenos 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 2 warning signs for Temenos (1 is a bit unpleasant!) that you need to be mindful 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.