Nagarro SE (FRA:NA9) Just Released Its Third-Quarter Earnings: Here's What Analysts Think

Investors in Nagarro SE (FRA:NA9) had a good week, as its shares rose 5.0% to close at €79.70 following the release of its quarterly results. Results overall were respectable, with statutory earnings of €5.62 per share roughly in line with what the analysts had forecast. Revenues of €234m came in 2.8% ahead of analyst predictions. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Nagarro

After the latest results, the four analysts covering Nagarro are now predicting revenues of €1.01b in 2024. If met, this would reflect a meaningful 9.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 36% to €5.48. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.02b and earnings per share (EPS) of €5.28 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of €120, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's 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. There are some variant perceptions on Nagarro, with the most bullish analyst valuing it at €190 and the most bearish at €85.00 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.

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. We would highlight that Nagarro's revenue growth is expected to slow, with the forecast 7.6% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.1% annually. 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 here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Nagarro following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Nagarro going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Nagarro 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.