Analysts Have Been Trimming Their Nagarro SE (ETR:NA9) Price Target After Its Latest Report

It's been a good week for Nagarro SE (ETR:NA9) shareholders, because the company has just released its latest third-quarter results, and the shares gained 4.3% to €93.00. Revenues came in 2.5% below expectations, at €243m. Statutory earnings per share were relatively better off, with a per-share profit of €3.86 being roughly in line with analyst estimates. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Nagarro

Taking into account the latest results, the consensus forecast from Nagarro's four analysts is for revenues of €1.05b in 2025. This reflects a solid 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 31% to €5.36. Before this earnings report, the analysts had been forecasting revenues of €1.05b and earnings per share (EPS) of €5.34 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

With no major changes to earnings forecasts, the consensus price target fell 7.4% to €112, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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 Nagarro analyst has a price target of €135 per share, while the most pessimistic values it at €102. This is a very narrow spread of estimates, implying either that Nagarro is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Nagarro's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.5% growth on an annualised basis. This is compared to a historical growth rate of 22% over the past five years. Compare this to the 27 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.7% per year. Factoring in the forecast slowdown in growth, it looks like Nagarro is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Nagarro going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Nagarro that you need to take into consideration.

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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.