Legence Corp. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts
Investors in Legence Corp. (NASDAQ:LGN) had a good week, as its shares rose 3.2% to close at US$66.38 following the release of its quarterly results. Revenues beat expectations by 18% to hit US$1.3b, although earnings fell badly short, with Legence reported a statutory loss of US$0.37 per share even though the analysts had been forecasting a profit. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Legence from 16 analysts is for revenues of US$4.78b in 2026. If met, it would imply a major 28% increase on its revenue over the past 12 months. Legence is also expected to turn profitable, with statutory earnings of US$0.89 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.27b and earnings per share (EPS) of US$1.19 in 2026. Although revenues are expected to increase meaningfully, the analysts have acknowledged the cost of growth, given the large cut to EPS estimates following the latest report.
See our latest analysis for Legence
The consensus price target was unchanged at US$103, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Legence at US$125 per share, while the most bearish prices it at US$80.00. 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.
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. The period to the end of 2026 brings more of the same, according to the analysts, with revenue forecast to display 63% growth on an annualised basis. That is in line with its 69% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So it's pretty clear that Legence is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Legence going out to 2028, and you can see them free on our platform here.
It might also be worth considering whether Legence's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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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.