Shareholders in Apollo Global Management, Inc. (NYSE:APO) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the latest upgrade, the nine analysts covering Apollo Global Management provided consensus estimates of US$2.9b revenue in 2022, which would reflect a concerning 50% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$2.5b in 2022. The consensus has definitely become more optimistic, showing a nice gain to revenue forecasts.
Notably, the analysts have cut their price target 5.7% to US$81.21, suggesting concerns around Apollo Global Management's valuation. 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 Apollo Global Management at US$105 per share, while the most bearish prices it at US$64.00. This shows there is still some 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. We would highlight that sales are expected to reverse, with a forecast 50% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 22% 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 3.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Apollo Global Management is expected to lag the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Apollo Global Management.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential concerns with Apollo Global Management, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 4 other concerns we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
What are the risks and opportunities for Apollo Global Management?
Trading at 58.6% below our estimate of its fair value
Became profitable this year
Earnings have declined by 18.9% per year over past 5 years
Significant insider selling over the past 3 months
Large one-off items impacting financial results
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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.