What Does The Future Hold For Sohu.com Limited (NASDAQ:SOHU)? These Analysts Have Been Cutting Their Estimates

The analysts covering Sohu.com Limited (NASDAQ:SOHU) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, Sohu.com's two analysts currently expect revenues in 2021 to be US$751m, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.3b in 2021. The consensus view seems to have become more pessimistic on Sohu.com, noting the pretty serious reduction to revenue estimates in this update.

View our latest analysis for Sohu.com

There was no particular change to the consensus price target of US$23.83, with Sohu.com's latest outlook seemingly not enough to result in a change of 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. The most optimistic Sohu.com analyst has a price target of US$26.00 per share, while the most pessimistic values it at US$22.00. With such a narrow range of valuations, 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 also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues next year. Historically, Sohu.com's sales have shrunk approximately 3.3% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 15% per year. So it's pretty clear that, although revenues are improving, Sohu.com is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Sohu.com going forwards.

Thirsting for more data? We have estimates for Sohu.com from its two analysts out until 2022, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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