Stock Analysis

Analysts Have Lowered Expectations For Proterra Inc. (NASDAQ:PTRA) After Its Latest Results

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Proterra Inc. (NASDAQ:PTRA) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. Revenues missed expectations somewhat, coming in at US$309m and leading to a corresponding blowout in statutory losses. The loss per share was US$1.06, some 14% larger than the analysts forecast. 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. 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 Proterra

NasdaqGS:PTRA Earnings and Revenue Growth March 18th 2023

Following the latest results, Proterra's six analysts are now forecasting revenues of US$497.3m in 2023. This would be a huge 61% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 11% from last year to US$0.93. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$533.7m and losses of US$0.97 per share in 2023. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.

The consensus price target fell 19% to US$6.00, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. 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. The most optimistic Proterra analyst has a price target of US$9.00 per share, while the most pessimistic values it at US$2.50. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 Proterra's rate of growth is expected to accelerate meaningfully, with the forecast 61% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 20% 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 4.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Proterra to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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. At Simply Wall St, we have a full range of analyst estimates for Proterra going out to 2025, 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 4 warning signs with Proterra (at least 1 which is concerning) , and understanding them should be part of your investment process.

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