It's been a mediocre week for Asure Software, Inc. (NASDAQ:ASUR) shareholders, with the stock dropping 12% to US$8.97 in the week since its latest annual results. The statutory results were mixed overall, with revenues of US$119m in line with analyst forecasts, but losses of US$0.42 per share, some 7.1% larger than the analysts were predicting. 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.
After the latest results, the eight analysts covering Asure Software are now predicting revenues of US$123.7m in 2024. If met, this would reflect a satisfactory 3.9% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 72% to US$0.10. Before this earnings announcement, the analysts had been modelling revenues of US$121.7m and losses of US$0.11 per share in 2024. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 23% to US$14.63. It looks likethe analysts have become less optimistic about the overall business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Asure Software analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$8.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Asure Software's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.9% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that Asure Software is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Asure Software's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Asure Software's future valuation.
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 Asure Software going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Asure Software has 1 warning sign we think you should be aware of.
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