Earnings Miss: Persistent Systems Limited Missed EPS By 37% And Analysts Are Revising Their Forecasts

Persistent Systems Limited (NSE:PERSISTENT) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a pretty bad result, all things considered. Although revenues of ₹47b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 37% to hit ₹22.22 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Persistent Systems after the latest results.

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Taking into account the latest results, the consensus forecast from Persistent Systems' 33 analysts is for revenues of ₹187.6b in 2027. This reflects a decent 12% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 13% to ₹136. Before this earnings report, the analysts had been forecasting revenues of ₹185.9b and earnings per share (EPS) of ₹146 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

View our latest analysis for Persistent Systems

It might be a surprise to learn that the consensus price target was broadly unchanged at ₹5,745, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Persistent Systems analyst has a price target of ₹6,772 per share, while the most pessimistic values it at ₹3,718. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. We can infer from the latest estimates that forecasts expect a continuation of Persistent Systems'historical trends, as the 25% annualised revenue growth to the end of 2027 is roughly in line with the 22% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.3% annually. So it's pretty clear that Persistent Systems is forecast to grow substantially faster than its industry.

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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at ₹5,745, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Persistent Systems going out to 2029, and you can see them free on our platform here.

We also provide an overview of the Persistent Systems Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.