Avalon Technologies Limited Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

Avalon Technologies Limited (NSE:AVALON) shareholders are probably feeling a little disappointed, since its shares fell 8.1% to ₹473 in the week after its latest first-quarter results. Revenues missed expectations, with revenue of ₹2.0b falling 11% short of forecasts. Earnings correspondingly dipped, with Avalon Technologies reporting a statutory loss of ₹0.34 per share, where the analysts were expecting a profit. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Avalon Technologies after the latest results.

See our latest analysis for Avalon Technologies

Following the latest results, Avalon Technologies' eleven analysts are now forecasting revenues of ₹10.7b in 2025. This would be a huge 29% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 206% to ₹8.65. In the lead-up to this report, the analysts had been modelling revenues of ₹10.5b and earnings per share (EPS) of ₹8.90 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The consensus price target held steady at ₹529, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Avalon Technologies, with the most bullish analyst valuing it at ₹663 and the most bearish at ₹400 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Avalon Technologies is forecast to grow faster in the future than it has in the past, with revenues expected to display 40% annualised growth until the end of 2025. If achieved, this would be a much better result than the 16% annual decline over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 24% per year. Not only are Avalon Technologies' revenues expected to improve, it seems that the analysts are also expecting it 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 Avalon Technologies. 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 ₹529, 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 Avalon Technologies. Long-term earnings power is much more important than next year's profits. We have forecasts for Avalon Technologies going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Avalon Technologies 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.