Aterian, Inc. (NASDAQ:ATER) Just Reported, And Analysts Assigned A US$9.67 Price Target

A week ago, Aterian, Inc. (NASDAQ:ATER) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. The results overall were credible, with revenues of US$28m beating expectations by 17%. Statutory losses were US$0.52 per share, 18% below what the analysts had 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Aterian

After the latest results, the consensus from Aterian's three analysts is for revenues of US$96.7m in 2024, which would reflect a definite 20% decline in revenue compared to the last year of performance. Losses are supposed to decline, shrinking 19% from last year to US$2.35. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$95.2m and losses of US$2.49 per share in 2024. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 36% to US$9.67. It looks likethe analysts have become less optimistic about the overall business. 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. Currently, the most bullish analyst values Aterian at US$12.00 per share, while the most bearish prices it at US$5.00. 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.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 36% by the end of 2024. This indicates a significant reduction from annual growth of 4.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aterian is expected to lag 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Aterian's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Aterian's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Aterian analysts - 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 Aterian .

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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.