Earnings Update: Alphawave IP Group plc (LON:AWE) Just Reported Its Interim Results And Analysts Are Updating Their Forecasts

There's been a notable change in appetite for Alphawave IP Group plc (LON:AWE) shares in the week since its half-year report, with the stock down 13% to UK£1.09. It was a weak result overall, with Alphawave IP Group reporting US$91m in revenues, which was 35% less than what the analysts had expected. 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.

Check out our latest analysis for Alphawave IP Group

After the latest results, the three analysts covering Alphawave IP Group are now predicting revenues of US$329.3m in 2024. If met, this would reflect a major 46% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 69% to US$0.034. Before this earnings announcement, the analysts had been modelling revenues of US$352.7m and losses of US$0.045 per share in 2024. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a very favorable reduction to losses per share in particular.

There was no major change to the UK£1.67average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. 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 Alphawave IP Group, with the most bullish analyst valuing it at UK£1.88 and the most bearish at UK£1.25 per share. This is a very narrow spread of estimates, implying either that Alphawave IP Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 clear from the latest estimates that Alphawave IP Group's rate of growth is expected to accelerate meaningfully, with the forecast 113% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 47% p.a. 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 29% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Alphawave IP Group to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also downgraded Alphawave IP Group's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at UK£1.67, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Alphawave IP Group analysts - 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 2 warning signs for Alphawave IP Group 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.