Results: Hercules Capital, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in Hercules Capital, Inc. (NYSE:HTGC) had a good week, as its shares rose 7.6% to close at US$18.60 following the release of its yearly results. Revenues were US$461m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.31 were also better than expected, beating analyst predictions by 15%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Hercules Capital after the latest results.

Check out our latest analysis for Hercules Capital

Following the latest results, Hercules Capital's eight analysts are now forecasting revenues of US$501.0m in 2024. This would be a solid 8.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 5.7% to US$2.01 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$487.3m and earnings per share (EPS) of US$2.00 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of US$18.28, implying that the uplift in revenue is not expected to greatly contribute to Hercules Capital's valuation in the near term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Hercules Capital analyst has a price target of US$21.00 per share, while the most pessimistic values it at US$16.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Hercules Capital's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.8% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.6% annually. So it's pretty clear that, while Hercules Capital's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than 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.

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. At Simply Wall St, we have a full range of analyst estimates for Hercules Capital going out to 2025, and you can see them free on our platform here..

Plus, you should also learn about the 4 warning signs we've spotted with Hercules Capital (including 2 which are a bit unpleasant) .

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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.