There’s been a major selloff in AKKA Technologies SE (EPA:AKA) shares in the week since it released its full-year report, with the stock down 31% to €21.75. It was a credible result overall, with revenues of €1.8b and statutory earnings per share of €3.61 both in line with analyst estimates, showing that AKKA Technologies is executing in line with expectations. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from AKKA Technologies’s five analysts is for revenues of €1.95b in 2020, which would reflect a notable 8.2% increase on its sales over the past 12 months. Statutory earnings per share are expected to crater 21% to €2.89 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.93b and earnings per share (EPS) of €4.61 in 2020. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
It might be a surprise to learn that the consensus price target fell 20% to €55.07, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 AKKA Technologies, with the most bullish analyst valuing it at €78.00 and the most bearish at €35.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It’s pretty clear that there is an expectation that AKKA Technologies’s revenue growth will slow down substantially, with revenues next year expected to grow 8.2%, compared to a historical growth rate of 14% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.5% next year. So it’s pretty clear that, while AKKA Technologies’s revenue growth is expected to slow, it’s still expected to grow faster than the industry itself.
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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of AKKA Technologies’s future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates – from multiple AKKA Technologies analysts – going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example – AKKA Technologies has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
If you spot an error that warrants correction, please contact the editor at email@example.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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