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The analysts covering TechTarget, Inc. (NASDAQ:TTGT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the nine analysts covering TechTarget, is for revenues of US$227m in 2023, which would reflect a sizeable 21% reduction in TechTarget's sales over the past 12 months. Statutory earnings per share are supposed to crater 100% to US$0.00065 in the same period. Previously, the analysts had been modelling revenues of US$259m and earnings per share (EPS) of US$0.53 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
See our latest analysis for TechTarget
It'll come as no surprise then, to learn that the analysts have cut their price target 20% to US$36.78. 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. The most optimistic TechTarget analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$27.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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 sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 23% 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 3.8% per year. It's pretty clear that TechTarget's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that TechTarget's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of TechTarget.