Gen Digital Inc. Beat Revenue Forecasts By 14%: Here's What Analysts Are Forecasting Next

Shareholders might have noticed that Gen Digital Inc. (NASDAQ:GEN) filed its quarterly result this time last week. The early response was not positive, with shares down 6.7% to US$21.30 in the past week. Gen Digital beat revenue forecasts by a solid 14% to hit US$936m. Statutory earnings per share came in at US$1.41, in line with expectations. 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.

View our latest analysis for Gen Digital

Taking into account the latest results, the consensus forecast from Gen Digital's four analysts is for revenues of US$3.86b in 2024, which would reflect a major 24% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 95% to US$1.62. In the lead-up to this report, the analysts had been modelling revenues of US$3.91b and earnings per share (EPS) of US$1.51 in 2024. So the consensus seems to have become somewhat more optimistic on Gen Digital's earnings potential following these results.

There's been no major changes to the consensus price target of US$25.80, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Gen Digital at US$29.00 per share, while the most bearish prices it at US$24.00. 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. One thing stands out from these estimates, which is that Gen Digital is forecast to grow faster in the future than it has in the past, with revenues expected to display 19% annualised growth until the end of 2024. If achieved, this would be a much better result than the 5.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 12% per year. Not only are Gen Digital's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Gen Digital following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.

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 Gen Digital going out to 2025, and you can see them free on our platform here..

You still need to take note of risks, for example - Gen Digital has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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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.