musicMagpie plc (LON:MMAG) Just Reported Earnings, And Analysts Cut Their Target Price

There's been a major selloff in musicMagpie plc (LON:MMAG) shares in the week since it released its yearly report, with the stock down 26% to UK£0.29. It was a pretty bad result overall; while revenues were in line with expectations at UK£145m, statutory losses exploded to UK£0.048 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on musicMagpie after the latest results.

View our latest analysis for musicMagpie

Following the latest results, musicMagpie's three analysts are now forecasting revenues of UK£152.2m in 2023. This would be a modest 4.8% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 74% to UK£0.012. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£152.6m and losses of UK£0.014 per share in 2023. Although the revenue estimates have not really changed musicMagpie'sfuture looks a little different to the past, with a favorable reduction in the loss per share forecasts in particular.

The consensus price target fell 80% to UK£0.35despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations.

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. The analysts are definitely expecting musicMagpie's growth to accelerate, with the forecast 4.8% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.4% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 8.6% annually. So it's clear that despite the acceleration in growth, musicMagpie is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will 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 musicMagpie's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on musicMagpie. Long-term earnings power is much more important than next year's profits. We have forecasts for musicMagpie going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for musicMagpie you should be aware of, and 1 of them is a bit concerning.

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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.