Vimeo, Inc. (NASDAQ:VMEO) Just Reported, And Analysts Assigned A US$11.83 Price Target

Shareholders will be ecstatic, with their stake up 21% over the past week following Vimeo, Inc.'s (NASDAQ:VMEO) latest quarterly results. Sales hit US$111m in line with forecasts, although the company reported a statutory loss per share of US$0.16 that was somewhat smaller than the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Vimeo

Following last week's earnings report, Vimeo's seven analysts are forecasting 2022 revenues to be US$431.9m, approximately in line with the last 12 months. Losses are forecast to balloon 22% to US$0.65 per share. Before this latest report, the consensus had been expecting revenues of US$445.9m and US$0.51 per share in losses. While this year's revenue estimates dropped there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target fell 13% to US$11.83, implicitly signalling that lower earnings per share are a leading indicator for Vimeo's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Vimeo analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$7.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Vimeo's revenue growth is expected to slow, with the forecast 3.0% annualised growth rate until the end of 2022 being well below the historical 24% growth over the last year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Vimeo is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Vimeo. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Vimeo going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Vimeo that 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.