Earnings Update: Here's Why Analysts Just Lifted Their ACI Worldwide, Inc. (NASDAQ:ACIW) Price Target To US$40.73

A week ago, ACI Worldwide, Inc. (NASDAQ:ACIW) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 3.1% better than analyst forecasts at US$316m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.07 per share, were 3.1% smaller than the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for ACI Worldwide

Taking into account the latest results, the consensus forecast from ACI Worldwide's seven analysts is for revenues of US$1.56b in 2024. This reflects a satisfactory 5.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 7.1% to US$1.48. In the lead-up to this report, the analysts had been modelling revenues of US$1.56b and earnings per share (EPS) of US$1.41 in 2024. So the consensus seems to have become somewhat more optimistic on ACI Worldwide's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.9% to US$40.73. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on ACI Worldwide, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$38.10 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that ACI Worldwide's rate of growth is expected to accelerate meaningfully, with the forecast 7.6% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, ACI Worldwide is expected to grow slower than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around ACI Worldwide's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that ACI Worldwide's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that 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 ACI Worldwide going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for ACI Worldwide you should know about.

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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.