One of the biggest stories of last week was how LegalZoom.com, Inc. (NASDAQ:LZ) shares plunged 24% in the week since its latest quarterly results, closing yesterday at US$9.28. It was an okay report, and revenues came in at US$174m, approximately in line with analyst estimates leading up to the results announcement. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for LegalZoom.com
Taking into account the latest results, the consensus forecast from LegalZoom.com's five analysts is for revenues of US$712.7m in 2024. This reflects a credible 6.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 53% to US$0.17. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$713.9m and earnings per share (EPS) of US$0.16 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$13.79, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic LegalZoom.com analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$10.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 8.8% growth on an annualised basis. That is in line with its 8.2% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.7% per year. So it's pretty clear that LegalZoom.com is forecast to grow substantially faster than its industry.
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around LegalZoom.com's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 LegalZoom.com going out to 2026, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.