Need To Know: Analysts Just Made A Substantial Cut To Their TechTarget, Inc. (NASDAQ:TTGT) Estimates

The latest analyst coverage could presage a bad day for TechTarget, Inc. (NASDAQ:TTGT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the seven analysts covering TechTarget are now predicting revenues of US$320m in 2023. If met, this would reflect a credible 6.3% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 111% to US$1.33. Previously, the analysts had been modelling revenues of US$359m and earnings per share (EPS) of US$1.58 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

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It'll come as no surprise then, to learn that the analysts have cut their price target 16% to US$72.38. 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. There are some variant perceptions on TechTarget, with the most bullish analyst valuing it at US$116 and the most bearish at US$70.00 per share. This is a fairly broad spread of estimates, suggesting that the 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. We would highlight that TechTarget's revenue growth is expected to slow, with the forecast 5.0% annualised growth rate until the end of 2023 being well below the historical 23% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.5% per year. So it's pretty clear that, while TechTarget's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for TechTarget. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of TechTarget.

Still, 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 TechTarget going out to 2024, 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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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.