New Forecasts: Here's What Analysts Think The Future Holds For ironSource Ltd. (NYSE:IS)

Shareholders in ironSource Ltd. (NYSE:IS) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

After this upgrade, ironSource's 15 analysts are now forecasting revenues of US$813m in 2022. This would be a substantial 61% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 243% to US$0.10. Before this latest update, the analysts had been forecasting revenues of US$712m and earnings per share (EPS) of US$0.095 in 2022. Sentiment certainly seems to have improved in recent times, with a nice gain to revenue and a slight bump in earnings per share estimates.

See our latest analysis for ironSource

As a result, it might be a surprise to see that the analysts have cut their price target 8.7% to US$12.68, which could suggest the forecast improvement in performance is not expected to last. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on ironSource, with the most bullish analyst valuing it at US$16.00 and the most bearish at US$9.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of ironSource'shistorical trends, as the 61% annualised revenue growth to the end of 2022 is roughly in line with the 71% annual revenue growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% annually. So it's pretty clear that ironSource is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of ironSource's future valuation. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at ironSource.

Better yet, our automated discounted cash flow calculation (DCF) suggests ironSource could be moderately undervalued. You can learn more about our valuation methodology on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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

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.