There's been a notable change in appetite for Upland Software, Inc. (NASDAQ:UPLD) shares in the week since its quarterly report, with the stock down 11% to US$44.20. It was a pretty bad result overall; while revenues were in line with expectations at US$74m, statutory losses exploded to US$0.69 per share. The analysts 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Upland Software's eight analysts are now forecasting revenues of US$305.3m in 2021. This would be a satisfactory 2.6% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$1.89. Before this latest report, the consensus had been expecting revenues of US$304.8m and US$1.69 per share in losses. While this year's revenue estimates held steady, there was also a considerable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target held steady at US$59.57, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's 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. There are some variant perceptions on Upland Software, with the most bullish analyst valuing it at US$65.00 and the most bearish at US$55.00 per share. This is a very narrow spread of estimates, implying either that Upland Software is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Upland Software's revenue growth is expected to slow, with the forecast 3.4% annualised growth rate until the end of 2021 being well below the historical 32% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. Factoring in the forecast slowdown in growth, it seems obvious that Upland Software is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Upland Software. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$59.57, with the latest estimates not enough to have an impact on their price targets.
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 estimates - from multiple Upland Software analysts - going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for Upland Software that you should be aware of.
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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