Weave Communications, Inc. (NYSE:WEAV) just released its first-quarter report and things are looking bullish. Weave Communications beat expectations with revenues of US$47m arriving 3.0% ahead of forecasts. The company also reported a statutory loss of US$0.10, 9.1% smaller than was expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the seven analysts covering Weave Communications are now predicting revenues of US$199.1m in 2024. If met, this would reflect a notable 12% improvement in revenue compared to the last 12 months. Losses are forecast to narrow 4.2% to US$0.41 per share. Before this latest report, the consensus had been expecting revenues of US$196.3m and US$0.40 per share in losses.
The average price target fell 13% to US$14.86, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. 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 Weave Communications analyst has a price target of US$18.00 per share, while the most pessimistic values it at US$12.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 pretty clear that there is an expectation that Weave Communications' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% per year. So it's pretty clear that, while Weave Communications' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Weave Communications 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 2 warning signs for Weave Communications 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.