Sogou Inc. (NYSE:SOGO) Analysts Are Cutting Their Estimates: Here's What You Need To Know
Sogou Inc. (NYSE:SOGO) shareholders are probably feeling a little disappointed, since its shares fell 9.7% to US$3.17 in the week after its latest first-quarter results. It looks like a positive result overall, with revenues of US$257m beating forecasts by 2.6%. Statutory losses of US$0.08 per share were roughly in line with what the analysts had forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Sogou
Following last week's earnings report, Sogou's eight analysts are forecasting 2020 revenues to be US$1.17b, approximately in line with the last 12 months. Statutory earnings per share are expected to plummet 23% to US$0.12 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.24b and earnings per share (EPS) of US$0.17 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
The consensus price target fell 6.1% to US$4.26, with the weaker earnings outlook clearly leading valuation estimates. 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 Sogou analyst has a price target of US$5.35 per share, while the most pessimistic values it at US$3.30. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.4%, a significant reduction from annual growth of 17% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. It's pretty clear that Sogou's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. 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. At Simply Wall St, we have a full range of analyst estimates for Sogou going out to 2022, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Sogou you should be aware of.
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This article by Simply Wall St is general in nature. 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. Thank you for reading.