It's been a sad week for WalkMe Ltd. (NASDAQ:WKME), who've watched their investment drop 15% to US$13.79 in the week since the company reported its annual result. It was a pretty bad result overall; while revenues were in line with expectations at US$193m, statutory losses exploded to US$1.85 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for WalkMe from seven analysts is for revenues of US$252.1m in 2022 which, if met, would be a huge 30% increase on its sales over the past 12 months. Losses are expected to hold steady at around US$1.14. Before this earnings announcement, the analysts had been modelling revenues of US$245.6m and losses of US$0.74 per share in 2022. While this year's revenue estimates increased, there was also a considerable increase to loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
It will come as no surprise that expanding losses caused the consensus price target to fall 15% to US$27.38with the analysts implicitly ranking ongoing losses as a greater concern than growing revenues. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic WalkMe analyst has a price target of US$40.00 per share, while the most pessimistic values it at US$19.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 30% growth on an annualised basis. That is in line with its 30% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So although WalkMe is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at WalkMe. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of WalkMe's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on WalkMe. Long-term earnings power is much more important than next year's profits. We have forecasts for WalkMe going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with WalkMe , and understanding them should be part of your investment process.
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.