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Earnings Beat: Zedge, Inc. (NYSEMKT:ZDGE) Just Beat Analyst Forecasts, And Analysts Have Been Lifting Their Forecasts

Zedge, Inc. (NYSEMKT:ZDGE) defied analyst predictions to release its yearly results, which were ahead of market expectations. Revenues and losses per share were both better than expected, with revenues of US$9.5m leading estimates by 8.6%. Statutory losses were smaller than the analystexpected, coming in at US$0.05 per share. The analyst typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.

See our latest analysis for Zedge


Taking into account the latest results, the consensus forecast from Zedge’s lone analyst is for revenues of US$11.3m in 2021, which would reflect a notable 19% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 41% to US$0.03. Yet prior to the latest earnings, the analyst had been forecasting revenues of US$10.3m and losses of US$0.09 per share in 2021. There’s been a pretty noticeable increase in sentiment, with the analyst upgrading revenues and making a loss per share in particular.

It will come as no surprise to learn thatthe analyst has increased their price target for Zedge 67% to US$5.00on the back of these upgrades.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Zedge is forecast to grow faster in the future than it has in the past, with revenues expected to grow 19%. If achieved, this would be a much better result than the 2.9% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 16% next year. So while Zedge’s revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most obvious conclusion is that the analyst made no changes to their forecasts for a loss next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Zedge will grow in line with the overall industry. There was also a nice increase in the price target, with the analyst 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 Zedge. Long-term earnings power is much more important than next year’s profits. We have analyst estimates for Zedge going out as far as 2022, and you can see them free on our platform here.

And what about risks? Every company has them, and we’ve spotted 3 warning signs for Zedge you should know about.

This article by Simply Wall St is general in nature. 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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