Here's What Analysts Are Forecasting For Cerence Inc. (NASDAQ:CRNC) After Its Third-Quarter Results

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Cerence Inc. (NASDAQ:CRNC) just released its quarterly report and things are looking bullish. The results overall were pretty good, with revenues of US$62m exceeding expectations and statutory losses coming in at justUS$0.06 per share, some 75% below what the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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After the latest results, the six analysts covering Cerence are now predicting revenues of US$259.4m in 2026. If met, this would reflect a reasonable 5.5% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 70% to US$0.18. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$258.9m and losses of US$0.31 per share in 2026. Although the revenue estimates have not really changed Cerence'sfuture looks a little different to the past, with a considerable decrease in the loss per share forecasts in particular.

Check out our latest analysis for Cerence

There's been no major changes to the consensus price target of US$11.75, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. 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 Cerence analyst has a price target of US$16.00 per share, while the most pessimistic values it at US$10.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Cerence shareholders.

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. One thing stands out from these estimates, which is that Cerence is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.4% annualised growth until the end of 2026. If achieved, this would be a much better result than the 5.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually for the foreseeable future. Although Cerence's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for 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 Cerence's revenue is expected to perform worse than the wider industry. 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.

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 forecasts for Cerence going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Cerence that you need to take into consideration.

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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.