ACV Auctions Inc. (NASDAQ:ACVA) Just Reported, And Analysts Assigned A US$16.04 Price Target

As you might know, ACV Auctions Inc. (NASDAQ:ACVA) just kicked off its latest second-quarter results with some very strong numbers. Results overall were credible, with revenues arriving 3.6% better than analyst forecasts at US$115m. Higher revenues also resulted in lower statutory losses, which were US$0.16 per share, some 3.6% 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for ACV Auctions

Taking into account the latest results, the current consensus from ACV Auctions' 16 analysts is for revenues of US$431.3m in 2022, which would reflect a satisfactory 5.2% increase on its sales over the past 12 months. Losses are expected to increase slightly, to US$0.70 per share. Before this latest report, the consensus had been expecting revenues of US$453.7m and US$0.70 per share in losses.

The average price target fell 7.6% to US$16.04, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing 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. There are some variant perceptions on ACV Auctions, with the most bullish analyst valuing it at US$23.00 and the most bearish at US$9.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ACV Auctions' past performance and to peers in the same industry. We would highlight that ACV Auctions' revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2022 being well below the historical 43% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.2% annually. So it's pretty clear that, while ACV Auctions' 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. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on ACV Auctions. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple ACV Auctions analysts - going out to 2024, and you can see them free on our platform here.

You can also see our analysis of ACV Auctions' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.