Analysts Have Been Trimming Their Aterian, Inc. (NASDAQ:ATER) Price Target After Its Latest Report

It's been a sad week for Aterian, Inc. (NASDAQ:ATER), who've watched their investment drop 19% to US$0.93 in the week since the company reported its annual result. The statutory results were not great - while revenues of US$221m were in line with expectations,Aterian lost US$2.95 a share in the process. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Aterian

After the latest results, the consensus from Aterian's five analysts is for revenues of US$206.4m in 2023, which would reflect a small 6.7% decline in sales compared to the last year of performance. The loss per share is expected to greatly reduce in the near future, narrowing 83% to US$0.44. Before this latest report, the consensus had been expecting revenues of US$217.5m and US$0.63 per share in losses. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a very favorable reduction to losses per share in particular.

The consensus price target fell 5.3% to US$2.70, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in 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. Currently, the most bullish analyst values Aterian at US$4.00 per share, while the most bearish prices it at US$1.25. 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. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 6.7% by the end of 2023. This indicates a significant reduction from annual growth of 28% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.0% per year. So it's pretty clear that Aterian's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately they also downgraded their revenue estimates, and our analysts estimates suggest that Aterian is still expected to perform worse than the wider industry. Still, 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Aterian going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 4 warning signs for Aterian you should be aware of.

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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.