AppHarvest, Inc. (NASDAQ:APPH) Just Reported Earnings, And Analysts Cut Their Target Price

Shareholders in AppHarvest, Inc. (NASDAQ:APPH) had a terrible week, as shares crashed 25% to US$3.24 in the week since its latest quarterly results. It was a moderately negative result overall - revenue fell 4.4% short of analyst estimates at US$5.2m, although at least statutory losses were marginally smaller than expected, at US$0.30 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for AppHarvest

Following the latest results, AppHarvest's twin analysts are now forecasting revenues of US$26.6m in 2022. This would be a substantial 123% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 30% to US$1.16. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$26.8m and losses of US$1.23 per share in 2022. 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.

The consensus price target fell 8.9% to US$6.83despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that AppHarvest's revenue growth is expected to slow, with the forecast 192% annualised growth rate until the end of 2022 being well below the historical 418% 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 2.9% annually. Even after the forecast slowdown in growth, it seems obvious that AppHarvest is also expected to grow faster 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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 AppHarvest'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 analyst estimates for AppHarvest going out as far as 2024, and you can see them free on our platform here.

Plus, you should also learn about the 5 warning signs we've spotted with AppHarvest (including 1 which makes us a bit uncomfortable) .

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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.