Yahoo Finance Newsflash: Sohu.com Limited (NASDAQ:SOHU) Analysts Have Been Trimming Their Revenue Forecasts
Today is shaping up negative for Sohu.com Limited (NASDAQ:SOHU) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, Sohu.com's twin analysts currently expect revenues in 2021 to be US$751m, approximately in line with the last 12 months. Before the latest update, the analysts were foreseeing US$1.3b of revenue in 2021. The consensus view seems to have become more pessimistic on Sohu.com, noting the pretty serious reduction to revenue estimates in this update.
View our latest analysis for Sohu.com
There was no particular change to the consensus price target of US$23.83, with Sohu.com's latest outlook seemingly not enough to result in a change of valuation. 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. Currently, the most bullish analyst values Sohu.com at US$26.00 per share, while the most bearish prices it at US$22.00. This is a very narrow spread of estimates, implying either that Sohu.com is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues next year. Historically, Sohu.com's sales have shrunk approximately 3.3% annually over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 15% next year. So it's pretty clear that, although revenues are improving, Sohu.com is still expected to grow slower than the industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Sohu.com this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Sohu.com after today.
Want to learn more? We have estimates for Sohu.com from its twin analysts out until 2022, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
