It's been a sad week for CS Disco, Inc. (NYSE:LAW), who've watched their investment drop 13% to US$6.80 in the week since the company reported its first-quarter result. Revenues of US$36m were in line with expectations, although statutory losses per share were US$0.17, some 11% smaller than was expected. 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. 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 CS Disco

Taking into account the latest results, the current consensus from CS Disco's six analysts is for revenues of US$147.2m in 2024. This would reflect a satisfactory 4.7% increase on its revenue over the past 12 months. Per-share losses are expected to explode, reaching US$0.72 per share. Before this earnings announcement, the analysts had been modelling revenues of US$149.2m and losses of US$0.75 per share in 2024. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

The consensus price target fell 7.5% to US$8.17despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. 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. Currently, the most bullish analyst values CS Disco at US$11.00 per share, while the most bearish prices it at US$6.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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 CS Disco's revenue growth is expected to slow, with the forecast 6.4% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. Factoring in the forecast slowdown in growth, it seems obvious that CS Disco is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that CS Disco's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple CS Disco analysts - going out to 2026, 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 CS Disco 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.