Earnings Beat: Grid Dynamics Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Shareholders in Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) had a terrible week, as shares crashed 24% to US$7.93 in the week since its latest quarterly results. It looks like a credible result overall - although revenues of US$101m were what the analysts expected, Grid Dynamics Holdings surprised by delivering a (statutory) profit of US$0.06 per share, an impressive 274% above what was forecast. The 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the current consensus from Grid Dynamics Holdings' five analysts is for revenues of US$414.9m in 2025. This would reflect a satisfactory 6.6% increase on its revenue over the past 12 months. Statutory earnings per share are expected to plummet 42% to US$0.12 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$416.4m and earnings per share (EPS) of US$0.16 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

Check out our latest analysis for Grid Dynamics Holdings

It might be a surprise to learn that the consensus price target fell 11% to US$15.75, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Grid Dynamics Holdings at US$18.00 per share, while the most bearish prices it at US$13.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Grid Dynamics Holdings' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Grid Dynamics Holdings' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 22% over the past five years. Compare this to the 106 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it looks like Grid Dynamics Holdings is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Grid Dynamics Holdings. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 Grid Dynamics Holdings' future valuation.

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 Simply Wall St, we have a full range of analyst estimates for Grid Dynamics Holdings going out to 2027, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for Grid Dynamics Holdings (1 is concerning!) that you need to be mindful 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.