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Forthcoming Revenue & Earnings Surprises
Compared to Wall Street we’re more optimistic in revenue projections as we feel the tone of, and evidence from, the 3Q20 earnings call has been unnoticed. For the first time since the onset of the pandemic management submitted guidance and Shwed’s (founder & CEO) and Payne’s (CFO) mood was materially upbeat compared to recent quarters and the two were noticeably more assertive. And this change in confidence appears to be underpinned by increased demand for Maestro and Infinity. We project revenue and EPS will comfortably beat expectations in 4Q20E and expand the 8.0x NTM P/S at the time of writing to 52-week highs of 8.8x. This would deliver 10% upside to $132 from now through to a couple of weeks following the 4Q20 earnings release on 3rd Feb 2021, in our opinion. Alternatively the anticipated earnings surprise will expand the NTM P/E to 52-week highs of c. 19.4x which would produce a $134 share price (12% upside). Both these price forecasts are based on the current consensus NTM forecasts once 4Q20E results have been released on 3rd Feb 2021.
| NTM P/S | NTM P/E | ||
| Current (27th Nov 2020) | 8.0x | 17.4x | |
| 52 week high | 8.8x | 19.4x | |
| Sales per share | EPS | ||
| 4Q20E earnings (3rd Feb) | Beat | Beat | |
| Consensus NTM after 4Q20E earnings | 15.01 | 6.91 | |
| Convequity NTM after 4Q20E earnings | 15.76 | 7.87 | |
| Consensus-based new price | $132.09 | $134.05 | |
| Convequity-based new price | $138.79 | $152.68 | |
The NTM P/E is based on diluted non-GAAP EPS which excludes stock-based compensation (SBC) and amortization of acquired intangibles, as this version of EPS is more of a focus of the tech investment community than the GAAP
