Agora, Inc. (NASDAQ:API) Annual Results Just Came Out: Here's What Analysts Are Forecasting For This Year

It's been a mediocre week for Agora, Inc. (NASDAQ:API) shareholders, with the stock dropping 15% to US$3.22 in the week since its latest yearly results. Revenues came in at US$161m, in line with expectations, while statutory losses per share were substantially higher than expected, at US$1.08 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Agora

Taking into account the latest results, the six analysts covering Agora provided consensus estimates of US$157.3m revenue in 2023, which would reflect a perceptible 2.1% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 55% to US$0.47. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$169.6m and losses of US$0.53 per share in 2023. Although the revenue estimates have fallen somewhat, Agora'sfuture looks a little different to the past, with a favorable reduction in the loss per share forecasts in particular.

There was no major change to the US$5.40average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Agora analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$3.50. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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 annualised revenue decline of 2.1% by the end of 2023. This indicates a significant reduction from annual growth of 23% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. It's pretty clear that Agora's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, long term profitability is more important for the value creation process. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Agora going out to 2025, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Agora 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.