Confluent, Inc. (NASDAQ:CFLT) Just Reported, And Analysts Assigned A US$30.97 Price Target

There's been a major selloff in Confluent, Inc. (NASDAQ:CFLT) shares in the week since it released its second-quarter report, with the stock down 23% to US$19.29. Revenue of US$235m came in 2.1% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.28, a 11% miss. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Confluent

After the latest results, the 31 analysts covering Confluent are now predicting revenues of US$954.8m in 2024. If met, this would reflect a solid 10% improvement in revenue compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$1.05. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$959.3m and losses of US$1.03 per share in 2024. So it's pretty clear consensus is mixed on Confluent after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a moderate increase in per-share loss expectations.

The consensus price target fell 11% to US$30.97per share, with the analysts clearly concerned by ballooning losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Confluent, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$24.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. We would highlight that Confluent's revenue growth is expected to slow, with the forecast 22% annualised growth rate until the end of 2024 being well below the historical 33% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% annually. So it's pretty clear that, while Confluent's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Confluent's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Confluent going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Confluent 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com