Analysts Are Updating Their adesso SE (ETR:ADN1) Estimates After Its Annual Results

Last week saw the newest full-year earnings release from adesso SE (ETR:ADN1), an important milestone in the company's journey to build a stronger business. It looks like the results were a bit of a negative overall. While revenues of €1.1b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.9% to hit €0.49 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for adesso

After the latest results, the four analysts covering adesso are now predicting revenues of €1.29b in 2024. If met, this would reflect a solid 13% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 656% to €3.72. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.29b and earnings per share (EPS) of €4.26 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

The consensus price target held steady at €174, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on adesso, with the most bullish analyst valuing it at €210 and the most bearish at €145 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that adesso's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 13% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.9% annually. Even after the forecast slowdown in growth, it seems obvious that adesso is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for adesso. 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 held steady at €174, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on adesso. Long-term earnings power is much more important than next year's profits. We have forecasts for adesso going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for adesso that 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.