Avalon Technologies Limited Just Missed Earnings - But Analysts Have Updated Their Models

Avalon Technologies Limited (NSE:AVALON) just released its latest second-quarter report and things are not looking great. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (₹2.0b) coming in 23% below what they had expected. Statutory earnings per share of ₹1.09 fell 94% short. 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 Avalon Technologies

Taking into account the latest results, the most recent consensus for Avalon Technologies from seven analysts is for revenues of ₹10.6b in 2024. If met, it would imply a solid 13% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to shoot up 62% to ₹10.53. In the lead-up to this report, the analysts had been modelling revenues of ₹11.2b and earnings per share (EPS) of ₹16.45 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 20% to ₹650. 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. There are some variant perceptions on Avalon Technologies, with the most bullish analyst valuing it at ₹752 and the most bearish at ₹580 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 clear from the latest estimates that Avalon Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.9% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Avalon Technologies is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Avalon Technologies. They also downgraded Avalon Technologies' revenue estimates, but industry data suggests that it is 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 Avalon Technologies' future valuation.

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 Avalon Technologies analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Avalon Technologies that you need to take into consideration.

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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.