PROS Holdings, Inc. (NYSE:PRO) Just Reported And Analysts Have Been Cutting Their Estimates

As you might know, PROS Holdings, Inc. (NYSE:PRO) just kicked off its latest third-quarter results with some very strong numbers. It looks like a positive result overall, with revenues of US$62m beating forecasts by 2.5%. Statutory losses of US$0.44 per share were 2.5% smaller than the analysts expected, likely helped along by the higher revenues. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for PROS Holdings

Following last week's earnings report, PROS Holdings' eleven analysts are forecasting 2021 revenues to be US$257.1m, approximately in line with the last 12 months. Losses are forecast to narrow 8.5% to US$1.62 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$270.7m and losses of US$1.56 per share in 2021. So it's pretty clear consensus is more negative on PROS Holdings after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a per-share loss expectations.

The consensus price target fell 5.2% to US$41.89, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values PROS Holdings at US$58.00 per share, while the most bearish prices it at US$25.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.3%, a significant reduction from annual growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 13% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - PROS Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on PROS Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple PROS Holdings analysts - going out to 2022, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for PROS Holdings you should know about.

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.

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