Results: Temenos AG Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders might have noticed that Temenos AG (VTX:TEMN) filed its first-quarter result this time last week. The early response was not positive, with shares down 7.6% to CHF58.35 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at US$232m, statutory earnings beat expectations 6.1%, with Temenos reporting profits of US$0.40 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Temenos after the latest results.

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Following last week's earnings report, Temenos' 14 analysts are forecasting 2025 revenues to be US$1.04b, approximately in line with the last 12 months. Statutory earnings per share are forecast to fall 11% to US$2.19 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.06b and earnings per share (EPS) of US$2.27 in 2025. 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.

See our latest analysis for Temenos

It might be a surprise to learn that the consensus price target was broadly unchanged at CHF69.92, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Temenos analyst has a price target of CHF91.64 per share, while the most pessimistic values it at CHF45.87. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 1.0% annualised decline to the end of 2025. That is a notable change from historical growth of 2.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. It's pretty clear that Temenos' revenues are expected to perform substantially worse than the wider industry.

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 held steady at CHF69.92, with the latest estimates not enough to have an impact on their price targets.

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 2027, and you can see them free on our platform here..

Before you take the next step you should know about the 1 warning sign for Temenos that we have uncovered.

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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.