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There's been a major selloff in TrueCar, Inc. (NASDAQ:TRUE) shares in the week since it released its full-year report, with the stock down 25% to US$2.50. Revenues came in at US$176m, in line with forecasts and the company reported a statutory loss of US$0.34 per share, roughly in line with expectations. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for TrueCar
Taking into account the latest results, the most recent consensus for TrueCar from six analysts is for revenues of US$200.4m in 2025. If met, it would imply a decent 14% increase on its revenue over the past 12 months. Losses are supposed to decline, shrinking 16% from last year to US$0.30. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$212.2m and losses of US$0.15 per share in 2025. So it's pretty clear the analysts have mixed opinions on TrueCar after this update; revenues were downgraded and per-share losses expected to increase.
The average price target fell 12% to US$4.17, implicitly signalling that lower earnings per share are a leading indicator for TrueCar's valuation. 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 TrueCar at US$5.00 per share, while the most bearish prices it at US$3.25. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await TrueCar shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that TrueCar is forecast to grow faster in the future than it has in the past, with revenues expected to display 14% annualised growth until the end of 2025. If achieved, this would be a much better result than the 17% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 10% annually. So it looks like TrueCar is expected to grow faster than its competitors, at least for a while.