Alphawave IP Group plc Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

Alphawave IP Group plc (LON:AWE) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues fell 8.1% short of expectations, at US$322m. Earnings correspondingly dipped, with Alphawave IP Group reporting a statutory loss of US$0.072 per share, whereas the analysts had previously modelled a profit in this period. 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. 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 Alphawave IP Group

Following the latest results, Alphawave IP Group's three analysts are now forecasting revenues of US$385.0m in 2024. This would be a solid 20% improvement in revenue compared to the last 12 months. Per-share statutory losses are expected to see a sharp uptick, reaching US$0.061. Before this earnings report, the analysts had been forecasting revenues of US$402.5m and earnings per share (EPS) of US$0.041 in 2024. There looks to have been a significant drop in sentiment regarding Alphawave IP Group's prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.

The average price target fell 9.2% to UK£2.03, implicitly signalling that lower earnings per share are a leading indicator for Alphawave IP Group's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Alphawave IP Group at UK£2.67 per share, while the most bearish prices it at UK£1.52. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Alphawave IP Group shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alphawave IP Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Alphawave IP Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 20% growth on an annualised basis. This is compared to a historical growth rate of 57% over the past five years. Compare this to the 8 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it looks like Alphawave IP Group is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Alphawave IP Group to become unprofitable next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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 Alphawave IP Group's future valuation.

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

Even so, be aware that Alphawave IP Group is showing 2 warning signs in our investment analysis , you should know about...

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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.