Coupa Software Incorporated Just Released Its Third-Quarter And Analysts Have Been Updating Their Estimates
Coupa Software Incorporated (NASDAQ:COUP) shares fell 2.3% to US$150 in the week since its latest third-quarter results. Revenues were a bright spot, with US$102m in sales arriving 5.8% ahead of expectations, although earnings didn't fare nearly so well, recording a loss of US$0.42, some 8.7% below consensus predictions. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
See our latest analysis for Coupa Software
Taking into account the latest results, the latest consensus from Coupa Software's 20 analysts is for revenues of US$486.6m in 2021, which would reflect a substantial 38% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 24% to US$1.69. Before this latest report, the consensus had been expecting revenues of US$478.4m and US$1.52 per share in losses. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
As a result, there was no major change to the consensus price target of US$160, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Coupa Software analyst has a price target of US$185 per share, while the most pessimistic values it at US$100.00. 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.
Further, we can compare these estimates to past performance, and see how Coupa Software forecasts compare to the wider market's forecast performance. Next year brings more of the same, according to analysts, with revenue forecast to grow 38%, in line with its 35% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So although Coupa Software is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Coupa Software going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Coupa Software Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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