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Iridium Communications Inc. (NASDAQ:IRDM) shares fell 4.2% to US$29.27 in the week since its latest annual results. Revenues of US$560m arrived in line with expectations, although statutory losses per share were US$1.33, an impressive 133% smaller than what broker models predicted. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following the latest results, Iridium Communications's four analysts are now forecasting revenues of US$597.0m in 2020. This would be an okay 6.5% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.31 per share. Before this latest report, the consensus had been expecting revenues of US$590.1m and US$0.37 per share in losses. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$32.20, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Iridium Communications analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$31.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
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 can infer from the latest estimates that analysts are expecting a continuation of Iridium Communications's historical trends, as next year's forecast 6.5% revenue growth is roughly in line with 7.1% annual revenue growth 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 revenues grow 1.2% per year. So although Iridium Communications is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most important thing to note from these estimates is that the consensus increased its forecast losses next year, suggesting all may not be well at Iridium Communications. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Iridium Communications's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$32.20, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Iridium Communications. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Iridium Communications analysts - going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Iridium Communications's balance sheet, and whether we think Iridium Communications is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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