Earnings Update: Here's Why Analysts Just Lifted Their Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) Price Target To US$16.40

Shareholders might have noticed that Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) filed its full-year result this time last week. The early response was not positive, with shares down 3.7% to US$14.36 in the past week. Revenues of US$113m beat expectations by a respectable 3.4%, although statutory losses per share increased. Grid Dynamics Holdings lost US$0.28, which was 35% more than what the analysts had included in their models. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Grid Dynamics Holdings

Taking into account the latest results, the most recent consensus for Grid Dynamics Holdings from six analysts is for revenues of US$134.3m in 2021 which, if met, would be a solid 19% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 68% to US$0.065. Before this earnings announcement, the analysts had been modelling revenues of US$134.3m and losses of US$0.065 per share in 2021.

The average price target fell 21% to US$16.40, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Grid Dynamics Holdings, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$11.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Grid Dynamics Holdings'historical trends, as the 19% annualised revenue growth to the end of 2021 is roughly in line with the 17% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So although Grid Dynamics Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Grid Dynamics Holdings going out to 2022, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Grid Dynamics Holdings that you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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