It’s been a pretty great week for Zebra Technologies Corporation (NASDAQ:ZBRA) shareholders, with its shares surging 17% to US$478 in the week since its latest full-year results. Zebra Technologies reported US$4.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$9.35 beat expectations, being 6.5% higher than what the analysts expected. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Zebra Technologies
Taking into account the latest results, the consensus forecast from Zebra Technologies’ ten analysts is for revenues of US$4.94b in 2021, which would reflect a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 43% to US$13.50. In the lead-up to this report, the analysts had been modelling revenues of US$4.84b and earnings per share (EPS) of US$12.16 in 2021. There’s been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a substantial gain in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for Zebra Technologies 12% to US$446on the back of these upgrades. 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 Zebra Technologies analyst has a price target of US$500 per share, while the most pessimistic values it at US$270. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 clear from the latest estimates that Zebra Technologies’ rate of growth is expected to accelerate meaningfully, with the forecast 11% revenue growth noticeably faster than its historical growth of 5.6%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.5% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Zebra Technologies is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Zebra Technologies following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn’t be too quick to come to a conclusion on Zebra Technologies. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Zebra Technologies analysts – going out to 2023, 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 Zebra Technologies you should be aware of.
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