Earnings Update: Here's Why Analysts Just Lifted Their Anaplan, Inc. (NYSE:PLAN) Price Target To US$75.62

Anaplan, Inc. (NYSE:PLAN) investors will be delighted, with the company turning in some strong numbers with its latest results. Results overall were credible, with revenues arriving 4.7% better than analyst forecasts at US$115m. Higher revenues also resulted in lower statutory losses, which were US$0.26 per share, some 4.7% 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Anaplan

Following the latest results, Anaplan's 18 analysts are now forecasting revenues of US$552.0m in 2022. This would be a sizeable 30% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$1.13 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$551.0m and losses of US$1.13 per share in 2022.

The average price target fell 11% to US$75.62, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. 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. There are some variant perceptions on Anaplan, with the most bullish analyst valuing it at US$90.00 and the most bearish at US$50.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Next year brings more of the same, according to the analysts, with revenue forecast to grow 30%, in line with its 30% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So it's pretty clear that Anaplan is forecast to grow substantially faster than its industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Anaplan. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Anaplan analysts - going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Anaplan (1 is a bit concerning!) that you need to take into consideration.

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