Some Analysts Just Cut Their Thoughtworks Holding, Inc. (NASDAQ:TWKS) Estimates

Market forces rained on the parade of Thoughtworks Holding, Inc. (NASDAQ:TWKS) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following this downgrade, Thoughtworks Holding's eleven analysts are forecasting 2023 revenues to be US$1.3b, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.5b in 2023. The consensus view seems to have become more pessimistic on Thoughtworks Holding, noting the measurable cut to revenue estimates in this update.

Check out our latest analysis for Thoughtworks Holding

Notably, the analysts have cut their price target 25% to US$9.15, suggesting concerns around Thoughtworks Holding's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Thoughtworks Holding, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$7.50 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Thoughtworks Holding's past performance and to peers in the same industry. We would highlight that Thoughtworks Holding's revenue growth is expected to slow, with the forecast 0.4% annualised growth rate until the end of 2023 being well below the historical 20% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Thoughtworks Holding.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Thoughtworks Holding after today.

Unanswered questions? We have estimates for Thoughtworks Holding from its eleven analysts out until 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.