Investors in NetScout Systems, Inc. (NASDAQ:NTCT) had a good week, as its shares rose 3.5% to close at US$22.48 following the release of its third-quarter results. NetScout Systems beat revenue forecasts by a solid 10% to hit US$218m. Statutory earnings per share came in at US$0.82, in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for NetScout Systems
NasdaqGS:NTCT Earnings and Revenue Growth January 29th 2024
Taking into account the latest results, NetScout Systems' three analysts currently expect revenues in 2025 to be US$833.0m, approximately in line with the last 12 months. Earnings are expected to improve, with NetScout Systems forecast to report a statutory profit of US$0.90 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$838.2m and earnings per share (EPS) of US$0.96 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$23.92, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values NetScout Systems at US$25.00 per share, while the most bearish prices it at US$22.75. This is a very narrow spread of estimates, implying either that NetScout Systems is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 also point out that the forecast 0.1% annualised revenue decline to the end of 2025 is better than the historical trend, which saw revenues shrink 0.4% annually 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 3.8% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect NetScout Systems to suffer 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that NetScout Systems' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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. We have forecasts for NetScout Systems going out to 2026, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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