Sapiens International Corporation N.V. Just Reported And Analysts Have Been Lifting Their Price Targets
Sapiens International Corporation N.V. (NASDAQ:SPNS) shares fell 4.3% to US$24.86 in the week since its latest annual results. Revenues of US$326m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.52, missing estimates by 2.5%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Sapiens International
Taking into account the latest results, the latest consensus from Sapiens International's four analysts is for revenues of US$381.3m in 2020, which would reflect a solid 17% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to jump 25% to US$0.66. In the lead-up to this report, analysts had been modelling revenues of US$366.5m and earnings per share (EPS) of US$0.66 in 2020. There doesn't appear to have been a major change in analyst sentiment following the results, other than the small increase to revenue estimates.
The consensus price target increased 8.5% to US$22.44, with an improved revenue forecast carrying the promise of a more valuable business, in time. 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. Currently, the most bullish analyst values Sapiens International at US$28.00 per share, while the most bearish prices it at US$8.75. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Next year brings more of the same, according to analysts, with revenue forecast to grow 17%, in line with its 15% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 12% next year. So although Sapiens International is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Sapiens International. 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 Sapiens International going out to 2022, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
