Sprout Social, Inc. (NASDAQ:SPT) Just Reported, And Analysts Assigned A US$38.17 Price Target

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Last week saw the newest third-quarter earnings release from Sprout Social, Inc. (NASDAQ:SPT), an important milestone in the company's journey to build a stronger business. Revenues were in line with expectations, at US$103m, while statutory losses ballooned to US$0.30 per share. 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.

See our latest analysis for Sprout Social

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NasdaqCM:SPT Earnings and Revenue Growth November 10th 2024

Taking into account the latest results, the most recent consensus for Sprout Social from twelve analysts is for revenues of US$467.0m in 2025. If met, it would imply a solid 19% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 34% to US$0.77. Before this latest report, the consensus had been expecting revenues of US$475.0m and US$0.81 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

The consensus price target fell 7.8% to US$38.17despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Sprout Social analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$23.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sprout Social's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Sprout Social's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 28% over the past five years. Compare this to the 419 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it looks like Sprout Social is forecast to grow at about the same rate as the wider industry.

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