US$76.00 - That's What Analysts Think PC Connection, Inc. (NASDAQ:CNXN) Is Worth After These Results

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Last week, you might have seen that PC Connection, Inc. (NASDAQ:CNXN) released its third-quarter result to the market. The early response was not positive, with shares down 6.8% to US$64.88 in the past week. PC Connection reported in line with analyst predictions, delivering revenues of US$725m and statutory earnings per share of US$1.02, suggesting the business is executing well and in line with its plan. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for PC Connection

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NasdaqGS:CNXN Earnings and Revenue Growth November 2nd 2024

Taking into account the latest results, the most recent consensus for PC Connection from two analysts is for revenues of US$2.96b in 2025. If met, it would imply a satisfactory 6.1% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to expand 10% to US$3.78. In the lead-up to this report, the analysts had been modelling revenues of US$3.05b and earnings per share (EPS) of US$3.90 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The average price target climbed 8.6% to US$76.00despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the PC Connection's past performance and to peers in the same industry. It's clear from the latest estimates that PC Connection's rate of growth is expected to accelerate meaningfully, with the forecast 4.9% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 1.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 7.4% annually. So it's clear that despite the acceleration in growth, PC Connection is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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.

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