Shareholders will be ecstatic, with their stake up 27% over the past week following 2U, Inc.'s (NASDAQ:TWOU) latest yearly results. Revenues came in at US$575m, in line with forecasts and the company reported a statutory loss of US$3.83 per share, roughly in line with expectations. Following the result, 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on 2U after the latest results.

See our latest analysis for 2U

Taking into account the latest results, the current consensus from 2U's 13 analysts is for revenues of US$736.3m in 2020, which would reflect a sizeable 28% increase on its sales over the past 12 months. Statutory losses are expected to increase substantially, hitting US$3.28. per share. Before this latest report, the consensus had been expecting revenues of US$728.6m and US$2.73 per share in losses. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

As a result, there was no major change to the consensus price target of US$30.00, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on 2U, with the most bullish analyst valuing it at US$41.00 and the most bearish at US$23.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the 2U's past performance and to peers in the same market. We can infer from the latest estimates that analysts are expecting a continuation of 2U's historical trends, as next year's forecast 28% revenue growth is roughly in line with 32% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 12% next year. So although 2U is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.

The Bottom Line

The most important thing to take away is that analysts reconfirmed their loss per share estimates for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that 2U's revenues are expected to grow faster than the wider market. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for 2U going out to 2022, and you can see them free on our platform here..

You can also view our analysis of 2U's balance sheet, and whether we think 2U is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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