Yahoo Finance Trupanion, Inc. (NASDAQ:TRUP) Just Reported Earnings, And Analysts Cut Their Target Price
There's been a notable change in appetite for Trupanion, Inc. (NASDAQ:TRUP) shares in the week since its quarterly report, with the stock down 18% to US$19.85. Revenues of US$306m arrived in line with expectations, although statutory losses per share were US$0.16, an impressive 36% smaller than what broker models predicted. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Trupanion
Taking into account the latest results, the consensus forecast from Trupanion's seven analysts is for revenues of US$1.26b in 2024. This reflects a decent 8.9% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 31% to US$0.44. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.26b and losses of US$0.45 per share in 2024.
As a result, it's unexpected to see that the consensus price target fell 10% to US$32.00, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts. 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 Trupanion at US$50.00 per share, while the most bearish prices it at US$22.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Trupanion's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.0% per year. So it's pretty clear that, while Trupanion's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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 forecasts for Trupanion going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Trupanion that 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.
