US$60.80: That's What Analysts Think Confluent, Inc. (NASDAQ:CFLT) Is Worth After Its Latest Results

By
Simply Wall St
Published
May 08, 2022
NasdaqGS:CFLT
Source: Shutterstock

A week ago, Confluent, Inc. (NASDAQ:CFLT) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It looks like a positive result overall, with revenues of US$126m beating forecasts by 6.5%. Statutory losses of US$0.41 per share were 6.5% smaller than the analysts expected, likely helped along by the higher revenues. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Confluent

earnings-and-revenue-growth
NasdaqGS:CFLT Earnings and Revenue Growth May 8th 2022

After the latest results, the 16 analysts covering Confluent are now predicting revenues of US$560.6m in 2022. If met, this would reflect a huge 28% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$1.57 per share. Before this latest report, the consensus had been expecting revenues of US$547.4m and US$1.60 per share in losses.

The analysts trimmed their valuations, with the average price target falling 20% to US$60.80, with the ongoing losses clearly weighing on sentiment despite the upgraded revenue estimates. 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. Currently, the most bullish analyst values Confluent at US$135 per share, while the most bearish prices it at US$28.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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. We would highlight that Confluent's revenue growth is expected to slow, with the forecast 39% annualised growth rate until the end of 2022 being well below the historical 66% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% 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 reconfirmed their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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. We have estimates - from multiple Confluent analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Confluent that you should be aware of.

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