As you might know, Rekor Systems, Inc. (NASDAQ:REKR) last week released its latest quarterly, and things did not turn out so great for shareholders. Earnings fell badly short of analyst estimates, with US$4.3m revenue falling -13% short, and statutory losses of US$0.12 per share being -20% greater than forecast. 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.
Following the latest results, Rekor Systems' three analysts are now forecasting revenues of US$20.0m in 2021. This would be a huge 49% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 26% to US$0.48. Before this earnings announcement, the analysts had been modelling revenues of US$26.1m and losses of US$0.34 per share in 2021. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 34% to US$15.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Rekor Systems analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$13.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Rekor Systems is forecast to grow faster in the future than it has in the past, with revenues expected to display 122% annualised growth until the end of 2021. If achieved, this would be a much better result than the 8.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.3% per year. So it looks like Rekor Systems is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Rekor Systems' revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Rekor Systems' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Rekor Systems going out to 2022, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for Rekor Systems (1 is potentially serious!) that you need to be mindful of.
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.
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