The latest analyst coverage could presage a bad day for Amdocs Limited (NASDAQ:DOX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the consensus from Amdocs’ six analysts is for revenues of US$4.1b in 2027, which would reflect an uncomfortable 12% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plunge 27% to US$3.47 in the same period. Previously, the analysts had been modelling revenues of US$4.8b and earnings per share (EPS) of US$6.72 in 2027. Indeed, we can see that the analysts are a lot more bearish about Amdocs’ prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Amdocs
The consensus price target fell 28% to US$57.33, with the weaker earnings outlook clearly leading analyst valuation estimates.
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 sales are expected to slow, with a forecast annualised revenue decline of 12% by the end of 2027. This indicates a significant reduction from annual growth of 1.1% 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. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Amdocs is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Amdocs analysts – going out to 2029, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.
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