Basware Oyj (HEL:BAS1V) Just Reported And Analysts Have Been Cutting Their Estimates

Shareholders might have noticed that Basware Oyj (HEL:BAS1V) filed its full-year result this time last week. The early response was not positive, with shares down 2.2% to €38.30 in the past week. Basware Oyj reported revenues of €152m, in line with expectations, but it unfortunately also reported (statutory) losses of €0.51 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Basware Oyj

After the latest results, the four analysts covering Basware Oyj are now predicting revenues of €157.0m in 2021. If met, this would reflect a modest 3.6% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 43% to €0.29. Before this earnings announcement, the analysts had been modelling revenues of €165.3m and losses of €0.19 per share in 2021. While this year's revenue estimates dropped there was also a regrettable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target was broadly unchanged at €42.75, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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. Currently, the most bullish analyst values Basware Oyj at €47.00 per share, while the most bearish prices it at €39.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's clear from the latest estimates that Basware Oyj's rate of growth is expected to accelerate meaningfully, with the forecast 3.6% revenue growth noticeably faster than its historical growth of 0.4%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Basware Oyj is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Basware Oyj. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at €42.75, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Basware Oyj analysts - going out to 2025, and you can see them free on our platform here.

It might also be worth considering whether Basware Oyj's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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