Analysts Are Updating Their Fathom Digital Manufacturing Corporation (NYSE:FATH) Estimates After Its First-Quarter Results

A week ago, Fathom Digital Manufacturing Corporation (NYSE:FATH) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 7.2% better than analyst forecasts at US$35m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.0098 per share, were 7.2% smaller than the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Fathom Digital Manufacturing after the latest results.

View our latest analysis for Fathom Digital Manufacturing

Following the recent earnings report, the consensus from four analysts covering Fathom Digital Manufacturing is for revenues of US$141.0m in 2023, implying an uneasy 9.4% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 99% to US$0.06. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$145.5m and losses of US$0.14 per share in 2023. Although the revenue estimates have fallen somewhat, Fathom Digital Manufacturing'sfuture looks a little different to the past, with a considerable decrease in the loss per share forecasts in particular.

There was no major change to the US$0.87average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. 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. There are some variant perceptions on Fathom Digital Manufacturing, with the most bullish analyst valuing it at US$1.00 and the most bearish at US$0.60 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Fathom Digital Manufacturing's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 12% to the end of 2023. This tops off a historical decline of 4.1% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.0% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Fathom Digital Manufacturing to suffer worse 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Fathom Digital Manufacturing. Long-term earnings power is much more important than next year's profits. We have forecasts for Fathom Digital Manufacturing going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for Fathom Digital Manufacturing (1 is a bit concerning!) that we have uncovered.

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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.