Last week, you might have seen that Digimarc Corporation (NASDAQ:DMRC) released its quarterly result to the market. The early response was not positive, with shares down 3.5% to US$31.69 in the past week. Sales hit US$5.8m in line with forecasts, although the company reported a statutory loss per share of US$0.68 that was somewhat smaller than the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Digimarc after the latest results.
Taking into account the latest results, the consensus forecast from Digimarc's dual analysts is for revenues of US$27.4m in 2021, which would reflect a solid 15% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 27% to US$2.03. Before this latest report, the consensus had been expecting revenues of US$27.6m and US$2.18 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.
These new estimates led to the consensus price target rising 77% to US$23.00, with lower forecast losses suggesting things could be looking up for Digimarc.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Digimarc's past performance and to peers in the same industry. The analysts are definitely expecting Digimarc's growth to accelerate, with the forecast 15% growth ranking favourably alongside historical growth of 0.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Digimarc is expected to grow at about the same rate as 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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
Before you take the next step you should know about the 3 warning signs for Digimarc that we have uncovered.
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