Model N, Inc. (NYSE:MODN) just released its quarterly report and things are looking bullish. Results overall were solid, with revenues arriving 2.1% better than analyst forecasts at US$63m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.05 per share, were 2.1% smaller than the analysts 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.

See our latest analysis for Model N

Following the latest results, Model N's eleven analysts are now forecasting revenues of US$262.2m in 2024. This would be a reasonable 3.3% improvement in revenue compared to the last 12 months. Model N is also expected to turn profitable, with statutory earnings of US$0.017 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$262.1m and losses of US$0.015 per share in 2024. While there's been no material change to the revenue estimates, there's been a pretty clear upgrade to earnings estimates, with the analysts expecting a per-share profit compared to previous expectations of a loss. So it seems like the latest results have led to a significant increase in sentiment for Model N.

There's been no major changes to the consensus price target of US$31.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 Model N analyst has a price target of US$37.00 per share, while the most pessimistic values it at US$25.00. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Model N's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.4% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. Factoring in the forecast slowdown in growth, it seems obvious that Model N is also expected to grow slower than other industry participants.