Telos Corporation (NASDAQ:TLS) Just Reported Earnings, And Analysts Cut Their Target Price

A week ago, Telos Corporation (NASDAQ:TLS) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 4.8% better than analyst forecasts at US$31m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.12 per share, were 4.8% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Telos after the latest results.

We've discovered 2 warning signs about Telos. View them for free.

After the latest results, the five analysts covering Telos are now predicting revenues of US$145.5m in 2025. If met, this would reflect a huge 33% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 33% to US$0.49. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$144.2m and losses of US$0.61 per share in 2025. Although the revenue estimates have not really changed Telos'future looks a little different to the past, with a considerable decrease in the loss per share forecasts in particular.

See our latest analysis for Telos

Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 20% to US$3.85. It looks likethe analysts have become less optimistic about the overall business. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Telos, with the most bullish analyst valuing it at US$7.00 and the most bearish at US$2.25 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Telos is forecast to grow faster in the future than it has in the past, with revenues expected to display 47% annualised growth until the end of 2025. If achieved, this would be a much better result than the 9.2% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. Not only are Telos' 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 to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Telos going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Telos you should be aware of.

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