Shareholders will be ecstatic, with their stake up 25% over the past week following Stem, Inc.'s (NYSE:STEM) latest second-quarter results. Stem beat revenue forecasts by a solid 15%, hitting US$67m. Statutory losses also increased, with a per-share loss of US$0.21, slightly larger than what the analysts wereexpecting. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the eight analysts covering Stem are now predicting revenues of US$392.8m in 2022. If met, this would reflect a substantial 96% improvement in sales compared to the last 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.70 per share in 2022. Before this latest report, the consensus had been expecting revenues of US$386.8m and US$0.71 per share in losses.
The consensus price target was unchanged at US$16.75, suggesting that the business - losses and all - is executing in line with estimates. 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 Stem analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$12.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Stem's rate of growth is expected to accelerate meaningfully, with the forecast 283% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 221% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Stem is expected to grow much 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 no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Stem going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 4 warning signs we've spotted with Stem (including 1 which can't be ignored) .
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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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