€12.20: That's What Analysts Think NFON AG (ETR:NFN) Is Worth After Its Latest Results
The second-quarter results for NFON AG (ETR:NFN) were released last week, making it a good time to revisit its performance. Revenues were €20m, with NFON reporting some 5.6% below analyst expectations. Following the result, the 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for NFON
Following last week's earnings report, NFON's four analysts are forecasting 2022 revenues to be €81.4m, approximately in line with the last 12 months. Losses are supposed to decline, shrinking 19% from last year to €0.84. Yet prior to the latest earnings, the analysts had been forecasting revenues of €82.3m and losses of €0.66 per share in 2022. So it's pretty clear the analysts have mixed opinions on NFON even after this update; although they reconfirmed their revenue numbers, it came at the cost of a sizeable expansion in per-share losses.
The consensus price target fell 21% to €12.20per share, with the analysts clearly concerned by ballooning losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values NFON at €15.00 per share, while the most bearish prices it at €9.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await NFON shareholders.
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. It's pretty clear that there is an expectation that NFON's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 3.3% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.1% annually. So it's pretty clear that, while NFON's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on NFON. Long-term earnings power is much more important than next year's profits. We have forecasts for NFON going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for NFON that you need to be mindful of.
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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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