Shareholders of Digi International Inc. (NASDAQ:DGII) will be pleased this week, given that the stock price is up 12% to US$27.22 following its latest third-quarter results. It looks like a credible result overall - although revenues of US$105m were in line with what the analysts predicted, Digi International surprised by delivering a statutory profit of US$0.26 per share, a notable 17% above expectations. 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 last week's earnings report, Digi International's five analysts are forecasting 2025 revenues to be US$435.5m, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 116% to US$1.01. In the lead-up to this report, the analysts had been modelling revenues of US$441.1m and earnings per share (EPS) of US$1.14 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$34.80, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Digi International at US$45.00 per share, while the most bearish prices it at US$26.00. 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 Digi International shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Digi International's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Digi International's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 0.8% growth on an annualised basis. This is compared to a historical growth rate of 13% 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 6.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Digi International is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Digi International. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$34.80, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Digi International going out to 2026, and you can see them free on our platform here..

You still need to take note of risks, for example - Digi International has 1 warning sign we think you should be aware 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.