Avalon Technologies Limited Just Missed EPS By 42%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for Avalon Technologies Limited (NSE:AVALON), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Unfortunately, Avalon Technologies delivered a serious earnings miss. Revenues of ₹2.1b were 11% below expectations, and statutory earnings per share of ₹0.98 missed estimates by 42%. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Avalon Technologies

After the latest results, the seven analysts covering Avalon Technologies are now predicting revenues of ₹12.5b in 2025. If met, this would reflect a substantial 36% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 122% to ₹14.66. In the lead-up to this report, the analysts had been modelling revenues of ₹12.6b and earnings per share (EPS) of ₹15.44 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at ₹602, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Avalon Technologies at ₹660 per share, while the most bearish prices it at ₹500. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Avalon Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 28% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 11% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 22% per year. 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 most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Avalon Technologies going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Avalon Technologies , and understanding these should be part of your investment process.

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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.