NetScout Systems, Inc. Just Beat Revenue Estimates By 10%

Investors in NetScout Systems, Inc. (NASDAQ:NTCT) had a good week, as its shares rose 3.5% to close at US$22.48 following the release of its third-quarter results. NetScout Systems beat revenue forecasts by a solid 10% to hit US$218m. Statutory earnings per share came in at US$0.82, in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for NetScout Systems

Following last week's earnings report, NetScout Systems' three analysts are forecasting 2025 revenues to be US$833.0m, approximately in line with the last 12 months. Earnings are expected to improve, with NetScout Systems forecast to report a statutory profit of US$0.90 per share. Before this earnings report, the analysts had been forecasting revenues of US$838.2m and earnings per share (EPS) of US$0.96 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$23.92, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 NetScout Systems analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$22.75. This is a very narrow spread of estimates, implying either that NetScout Systems is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2025 compared to the historical decline of 0.4% per annum 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 revenue grow 3.8% per year. So while a broad number of companies are forecast to grow, unfortunately NetScout Systems is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$23.92, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for NetScout Systems going out to 2026, and you can see them free on our platform here.

We also provide an overview of the NetScout Systems Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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.