Extreme Networks, Inc. (NASDAQ:EXTR) Just Reported Third-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

Last week, you might have seen that Extreme Networks, Inc. (NASDAQ:EXTR) released its third-quarter result to the market. The early response was not positive, with shares down 3.4% to US$11.20 in the past week. Revenues of US$211m beat expectations by a respectable 3.1%, although statutory losses per share increased. Extreme Networks lost US$0.50, which was 174% more than what the analysts had included in their models. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Extreme Networks

Taking into account the latest results, the seven analysts covering Extreme Networks provided consensus estimates of US$1.11b revenue in 2025, which would reflect an uneasy 9.6% decline over the past 12 months. Extreme Networks is also expected to turn profitable, with statutory earnings of US$0.054 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.14b and earnings per share (EPS) of US$0.46 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

The analysts made no major changes to their price target of US$14.58, suggesting the downgrades are not expected to have a long-term impact on Extreme Networks' 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. There are some variant perceptions on Extreme Networks, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$13.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 7.8% annualised decline to the end of 2025. That is a notable change from historical growth of 6.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.6% per year. It's pretty clear that Extreme Networks' revenues are expected to perform substantially worse 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$14.58, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Extreme Networks analysts - going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Extreme Networks' balance sheet, and whether we think Extreme Networks is carrying too much debt, for free on our platform here.

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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.