Objective Corporation Limited Just Recorded A 7.8% EPS Beat: Here's What Analysts Are Forecasting Next

Last week, you might have seen that Objective Corporation Limited (ASX:OCL) released its full-year result to the market. The early response was not positive, with shares down 4.4% to AU$6.80 in the past week. The result was positive overall - although revenues of AU$135m were in line with what the analysts predicted, Objective surprised by delivering a statutory profit of AU$0.38 per share, modestly greater than expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the six analysts covering Objective provided consensus estimates of AU$127.8m revenue in 2027, which would reflect a discernible 5.1% decline over the past 12 months. Statutory earnings per share are expected to plummet 31% to AU$0.27 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$137.4m and earnings per share (EPS) of AU$0.32 in 2027. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

Check out our latest analysis for Objective

The consensus price target fell 20% to AU$10.02, with the weaker earnings outlook clearly leading valuation estimates. 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 Objective analyst has a price target of AU$16.00 per share, while the most pessimistic values it at AU$5.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.1% by the end of 2027. This indicates a significant reduction from annual growth of 6.1% 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 14% annually for the foreseeable future. It's pretty clear that Objective's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Objective. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Objective's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Objective going out to 2029, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for Objective (1 shouldn't be ignored!) that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.