SeaChange International, Inc. (NASDAQ:SEAC) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

Shareholders might have noticed that SeaChange International, Inc. (NASDAQ:SEAC) filed its quarterly result this time last week. The early response was not positive, with shares down 3.1% to US$0.93 in the past week. Statutory losses were a bit smaller than expected, at just US$0.14 per share, even though revenues of US$5.0m missed analyst expectations by a shocking 20%. 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. 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 SeaChange International

After the latest results, the consensus from SeaChange International's dual analysts is for revenues of US$26.9m in 2022, which would reflect a sizeable 26% decline in sales compared to the last year of performance. Losses are supposed to decline, shrinking 12% from last year to US$0.41. Before this latest report, the consensus had been expecting revenues of US$42.4m and US$0.28 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target fell 50% to US$2.00, implicitly signalling that lower earnings per share are a leading indicator for SeaChange International's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SeaChange International's past performance and to peers in the same industry. Over the past five years, revenues have declined around 15% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 26% decline in revenue next year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 14% next year. So it's pretty clear that, while it does have declining revenues, the analysts also expect SeaChange International to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 2022, which can be seen for free on our platform here.

Even so, be aware that SeaChange International is showing 4 warning signs in our investment analysis , and 1 of those is a bit concerning...

If you’re looking to trade SeaChange International, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.