Innovid Corp. Beat Analyst Profit Forecasts, And Analysts Have New Estimates

It's been a pretty great week for Innovid Corp. (NYSE:CTV) shareholders, with its shares surging 14% to US$3.35 in the week since its latest second-quarter results. Although revenues of US$33m were in line with analyst expectations, Innovid surprised on the earnings front, with an unexpected (statutory) profit of US$0.03 per share a nice improvement on the losses that the analystsforecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Innovid

Taking into account the latest results, the consensus forecast from Innovid's three analysts is for revenues of US$130.3m in 2022, which would reflect a sizeable 20% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 69% to US$0.10. Before this latest report, the consensus had been expecting revenues of US$134.9m and US$0.11 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.

The analysts have cut their price target 19% to US$5.67per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. 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 Innovid, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$5.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Innovid's rate of growth is expected to accelerate meaningfully, with the forecast 45% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 31% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Innovid is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded their revenue estimates, although industry data suggests that Innovid's revenues are expected to grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Innovid's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Innovid. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Innovid analysts - going out to 2023, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Innovid , and understanding it should be part of your investment process.

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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.