Piedmont Lithium Inc. (ASX:PLL) Just Reported And Analysts Have Been Cutting Their Estimates

Piedmont Lithium Inc. (ASX:PLL) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a negative result overall, with revenues coming in 19% less than what the analysts expected, at US$13m. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Piedmont Lithium

Following the latest results, Piedmont Lithium's seven analysts are now forecasting revenues of US$115.1m in 2024. This would be a huge 73% improvement in revenue compared to the last 12 months. Statutory losses are forecast to balloon 52% to US$0.0099 per share. In the lead-up to this report, the analysts had been modelling revenues of US$121.8m and earnings per share (EPS) of US$0.093 in 2024. There looks to have been a significant drop in sentiment regarding Piedmont Lithium's prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.

The consensus price target fell 17% to AU$0.25, 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 Piedmont Lithium analyst has a price target of AU$0.35 per share, while the most pessimistic values it at AU$0.15. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Piedmont Lithium's past performance and to peers in the same industry. The analysts are definitely expecting Piedmont Lithium's growth to accelerate, with the forecast 200% annualised growth to the end of 2024 ranking favourably alongside historical growth of 95% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Piedmont Lithium is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Piedmont Lithium to become unprofitable next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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 Piedmont Lithium's future valuation.

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 Piedmont Lithium going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Piedmont Lithium you should be aware of.

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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.