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As you might know, Viavi Solutions Inc. (NASDAQ:VIAV) just kicked off its latest second-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 3.2% to hit US$300m. Viavi Solutions also reported a statutory profit of US$0.09, which was an impressive 29% above what the analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Viavi Solutions
Following the latest results, Viavi Solutions' nine analysts are now forecasting revenues of US$1.17b in 2021. This would be a modest 5.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 124% to US$0.29. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.15b and earnings per share (EPS) of US$0.27 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.9% to US$18.90per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Viavi Solutions, with the most bullish analyst valuing it at US$21.00 and the most bearish at US$16.00 per share. This is a very narrow spread of estimates, implying either that Viavi Solutions is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Viavi Solutions' revenue growth is expected to slow, with forecast 5.8% increase next year well below the historical 7.6%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.3% next year. So it's pretty clear that, while Viavi Solutions' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.