Gen Digital Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Gen Digital Inc. (NASDAQ:GEN) had a good week, as its shares rose 4.8% to close at US$28.27 following the release of its second-quarter results. Statutory earnings per share fell badly short of expectations, coming in at US$0.26, some 36% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$974m. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Gen Digital

Taking into account the latest results, Gen Digital's eight analysts currently expect revenues in 2025 to be US$3.92b, approximately in line with the last 12 months. Statutory earnings per share are predicted to bounce 41% to US$1.43. In the lead-up to this report, the analysts had been modelling revenues of US$3.91b and earnings per share (EPS) of US$1.49 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The consensus price target held steady at US$29.18, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Gen Digital analyst has a price target of US$37.00 per share, while the most pessimistic values it at US$21.00. 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.

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 would highlight that Gen Digital's revenue growth is expected to slow, with the forecast 2.8% annualised growth rate until the end of 2025 being well below the historical 11% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Gen Digital is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Gen Digital. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Gen Digital'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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Gen Digital going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Gen Digital has 5 warning signs we think you should be aware 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.