The analysts might have been a bit too bullish on SoundThinking, Inc. (NASDAQ:SSTI), given that the company fell short of expectations when it released its second-quarter results last week. Revenues missed expectations somewhat, coming in at US$24m, but statutory earnings fell catastrophically short, with a loss of US$0.37 some 46% larger than what the analysts had predicted. 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.

Taking into account the latest results, SoundThinking's six analysts currently expect revenues in 2026 to be US$99.4m, approximately in line with the last 12 months. Losses are expected to be contained, narrowing 13% from last year to US$1.12. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$109.2m and losses of US$0.68 per share in 2026. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target fell 22% to US$10.17, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 SoundThinking analyst has a price target of US$16.00 per share, while the most pessimistic values it at US$6.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that SoundThinking's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 2.9% growth on an annualised basis. This is compared to a historical growth rate of 12% 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 17% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than SoundThinking.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at SoundThinking. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for SoundThinking going out to 2028, and you can see them free on our platform here.

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.