Yahoo Finance Growth Investors: Industry Analysts Just Upgraded Their Open Text Corporation (NASDAQ:OTEX) Revenue Forecasts By 27%
Open Text Corporation (NASDAQ:OTEX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
After this upgrade, Open Text's nine analysts are now forecasting revenues of US$4.4b in 2023. This would be a sizeable 25% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 31% to US$0.82 in the same period. Before this latest update, the analysts had been forecasting revenues of US$3.5b and earnings per share (EPS) of US$0.76 in 2023. The forecasts seem more optimistic now, with a very substantial lift in revenue and a small lift in earnings per share estimates.
View our latest analysis for Open Text
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$44.88, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. The most optimistic Open Text analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$35.00. 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.
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 clear from the latest estimates that Open Text's rate of growth is expected to accelerate meaningfully, with the forecast 56% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 6.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Open Text to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Open Text.
Analysts are definitely bullish on Open Text, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including its declining profit margins. You can learn more, and discover the 1 other flag we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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