Shareholders of Confluent, Inc. (NASDAQ:CFLT) will be pleased this week, given that the stock price is up 10% to US$31.03 following its latest first-quarter results. The results don't look great, especially considering that statutory losses grew 17% toUS$0.30 per share. Revenues of US$217,237,000 did beat expectations by 2.5%, but it looks like a bit of a cold comfort. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Confluent after the latest results.
Taking into account the latest results, the most recent consensus for Confluent from 28 analysts is for revenues of US$959.4m in 2024. If met, it would imply a notable 17% increase on its revenue over the past 12 months. Losses are expected to be contained, narrowing 14% from last year to US$1.03. Before this earnings announcement, the analysts had been modelling revenues of US$950.1m and losses of US$1.00 per share in 2024. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a modest increase to its losses per share forecasts.
The consensus price target held steady at US$35.25, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Confluent, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$28.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. It's pretty clear that there is an expectation that Confluent's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 23% growth on an annualised basis. This is compared to a historical growth rate of 36% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. So it's pretty clear that, while Confluent's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Confluent. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Confluent going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 3 warning signs for Confluent you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.