Avid Technology, Inc. Just Recorded A 125% EPS Beat: Here's What Analysts Are Forecasting Next

Avid Technology, Inc. (NASDAQ:AVID) just released its latest third-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 8.1% to hit US$90m. Avid Technology also reported a statutory profit of US$0.18, which was an impressive 125% above what the analysts had forecast. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Avid Technology

Taking into account the latest results, the most recent consensus for Avid Technology from five analysts is for revenues of US$398.5m in 2021 which, if met, would be a satisfactory 7.0% increase on its sales over the past 12 months. Per-share earnings are expected to climb 15% to US$0.51. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$394.0m and earnings per share (EPS) of US$0.45 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the solid gain to earnings per share expectations following these results.

The consensus price target rose 5.9% to US$13.50, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. The most optimistic Avid Technology analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$9.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. For example, we noticed that Avid Technology's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 7.0%, well above its historical decline of 7.1% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.3% per year. So while Avid Technology's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Avid Technology following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Avid Technology going out to 2024, and you can see them free on our platform here..

Even so, be aware that Avid Technology is showing 3 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

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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