Stock Analysis

Taboola.com Ltd. (NASDAQ:TBLA) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

  •  Updated
NasdaqGS:TBLA
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Taboola.com Ltd. (NASDAQ:TBLA) investors will be delighted, with the company turning in some strong numbers with its latest results. Results overall were credible, with revenues arriving 3.2% better than analyst forecasts at US$332m. Higher revenues also resulted in lower statutory losses, which were US$0.10 per share, some 3.2% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Taboola.com

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NasdaqGS:TBLA Earnings and Revenue Growth November 12th 2022

Taking into account the latest results, the most recent consensus for Taboola.com from seven analysts is for revenues of US$1.50b in 2023 which, if met, would be a satisfactory 4.1% increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 14% from last year to US$0.093. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.62b and losses of US$0.04 per share in 2023. While next 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 fell 23% to US$4.83, implicitly signalling that lower earnings per share are a leading indicator for Taboola.com's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Taboola.com, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$3.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Taboola.com shareholders.

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. We would highlight that Taboola.com's revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2023 being well below the historical 11% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Taboola.com is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. 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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Taboola.com going out to 2024, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for Taboola.com that we have uncovered.

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