The quarterly results for Dolby Laboratories, Inc. (NYSE:DLB) were released last week, making it a good time to revisit its performance. It looks like a credible result overall - although revenues of US$290m were in line with what the analysts predicted, Dolby Laboratories surprised by delivering a statutory profit of US$0.39 per share, a notable 17% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Dolby Laboratories

Following the latest results, Dolby Laboratories' four analysts are now forecasting revenues of US$1.37b in 2023. This would be a notable 9.0% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 24% to US$2.47. Before this earnings report, the analysts had been forecasting revenues of US$1.42b and earnings per share (EPS) of US$2.88 in 2023. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share numbers.

The consensus price target fell 14% to US$100.00, with the weaker earnings outlook clearly leading valuation estimates. 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 Dolby Laboratories analyst has a price target of US$128 per share, while the most pessimistic values it at US$90.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Dolby Laboratories' rate of growth is expected to accelerate meaningfully, with the forecast 7.2% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 3.8% 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 13% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Dolby Laboratories is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will 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 Dolby Laboratories' 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. At Simply Wall St, we have a full range of analyst estimates for Dolby Laboratories going out to 2024, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Dolby Laboratories 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.