Polestar Automotive Holding UK PLC (NASDAQ:PSNY) Just Reported Earnings, And Analysts Cut Their Target Price

Polestar Automotive Holding UK PLC (NASDAQ:PSNY) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. The numbers were fairly weak, with revenue of US$685m missing analyst predictions by 9.4%, and (statutory) losses of US$0.14 per share being slightly larger 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Polestar Automotive Holding UK

After the latest results, the five analysts covering Polestar Automotive Holding UK are now predicting revenues of US$3.04b in 2023. If met, this would reflect a notable 14% improvement in revenue compared to the last 12 months. Losses are forecast to balloon 190% to US$0.38 per share. Before this latest report, the consensus had been expecting revenues of US$3.11b and US$0.47 per share in losses. Although the revenue estimates have fallen somewhat, Polestar Automotive Holding UK'sfuture looks a little different to the past, with a notable improvement in the loss per share forecasts in particular.

The analysts have cut their price target 24% to US$5.10per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Polestar Automotive Holding UK, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$1.60 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Polestar Automotive Holding UK's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 31% growth on an annualised basis. This is compared to a historical growth rate of 44% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% per year. So it's pretty clear that, while Polestar Automotive Holding UK's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Polestar Automotive Holding UK's 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 forecasts for Polestar Automotive Holding UK going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with Polestar Automotive Holding UK (including 2 which don't sit too well with us) .

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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.