Avantium N.V. (AMS:AVTX) Released Earnings Last Week And Analysts Lifted Their Price Target To €8.24

It's been a good week for Avantium N.V. (AMS:AVTX) shareholders, because the company has just released its latest annual results, and the shares gained 4.8% to €5.04. Revenues fell badly short of expectations, with sales of €11m, missing analyst estimates by 25%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Avantium

After the latest results, the five analysts covering Avantium are now predicting revenues of €19.0m in 2022. If met, this would reflect a sizeable 74% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching €0.95 per share. Before this earnings announcement, the analysts had been modelling revenues of €15.4m and losses of €0.77 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.

The average price target rose 9.7% to €8.24, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. 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. The most optimistic Avantium analyst has a price target of €14.61 per share, while the most pessimistic values it at €3.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avantium's past performance and to peers in the same industry. For example, we noticed that Avantium's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 74% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 2.5% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.6% annually. So it looks like Avantium is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Avantium. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Avantium going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Avantium (2 are concerning!) 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.