Investors in Amdocs Limited (NASDAQ:DOX) had a good week, as its shares rose 5.1% to close at US$58.55 following the release of its third-quarter results. It looks like a pretty bad result, all things considered. Although revenues of US$1.2b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 59% to hit US$0.59 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Following the latest results, Amdocs' five analysts are now forecasting revenues of US$4.85b in 2027. This would be an okay 4.3% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 62% to US$6.95. In the lead-up to this report, the analysts had been modelling revenues of US$4.85b and earnings per share (EPS) of US$6.67 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target fell 10.0% to US$81.21, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. 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 Amdocs analyst has a price target of US$105 per share, while the most pessimistic values it at US$70.84. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Amdocs' past performance and to peers in the same industry. The analysts are definitely expecting Amdocs' growth to accelerate, with the forecast 3.4% annualised growth to the end of 2027 ranking favourably alongside historical growth of 1.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 15% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Amdocs is expected to grow slower than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Amdocs following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Amdocs' revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Amdocs going out to 2028, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Amdocs , and understanding it should be part of your investment process.

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.