Earnings Update: Here's Why Analysts Just Lifted Their Outbrain Inc. (NASDAQ:OB) Price Target To US$6.60

Outbrain Inc. (NASDAQ:OB) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues and losses per share were both better than expected, with revenues of US$232m leading estimates by 2.1%. Statutory losses were smaller than the analystsexpected, coming in at US$0.11 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Outbrain

Taking into account the latest results, the most recent consensus for Outbrain from four analysts is for revenues of US$1.03b in 2023 which, if met, would be a credible 6.2% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 48% to US$0.29. Before this earnings announcement, the analysts had been modelling revenues of US$1.01b and losses of US$0.23 per share in 2023. While this year's revenue estimates held steady, there was also a sizeable expansion in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

Although the analysts are now forecasting higher losses, the average price target rose 7.0% to 6.16667, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. 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. There are some variant perceptions on Outbrain, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$5.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Outbrain is forecast to grow faster in the future than it has in the past, with revenues expected to display 8.3% annualised growth until the end of 2023. If achieved, this would be a much better result than the 6.9% annual decline over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.8% per year. So it looks like Outbrain is expected to grow at about the same rate as 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 Outbrain. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Outbrain. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Outbrain going out to 2025, and you can see them free on our platform here..

You still need to take note of risks, for example - Outbrain has 1 warning sign we think 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.