Yahoo Finance Praemium Limited (ASX:PPS) Released Earnings Last Week And Analysts Lifted Their Price Target To AU$1.16
It's been a pretty great week for Praemium Limited ( ASX:PPS ) shareholders, with its shares surging 11% to AU$0.69 in the week since its latest full-year results. It was a weak result overall, with Praemium reporting AU$64m in revenues, which was 22% less than what the analysts had expected.
Following our communication with company representative David Coulter, we would like to clarify that the above-mentioned revenue figure doesn't include revenue from the company's international division which was sold on June 30, 2022. The combined revenue for the group last year was AU$78m.
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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Praemium after the latest results.
See our latest analysis for Praemium
Taking into account the latest results, the consensus forecast from Praemium's four analysts is for revenues of AU$72.3m in 2023, which would reflect a solid 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 54% to AU$0.011. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$74.4m and earnings per share (EPS) of AU$0.0077 in 2023. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the great increase in to the earnings per share numbers.
There's been a 12% lift in the price target to AU$1.16, with the analysts signalling that the higher earnings forecasts are more relevant to the business than the weaker revenue estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Praemium analyst has a price target of AU$1.30 per share, while the most pessimistic values it at AU$1.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Praemium's past performance and to peers in the same industry . We can infer from the latest estimates that forecasts expect a continuation of Praemium'shistorical trends, as the 14% annualised revenue growth to the end of 2023 is roughly in line with the 13% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 16% per year. So although Praemium is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Praemium following these results. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Yet - earnings are more important to the intrinsic value of the business. 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 Praemium. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Praemium going out to 2025, 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 1 warning sign with Praemium , and understanding this should be part of your investment process.
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.
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