Time To Worry? Analysts Are Downgrading Their Avient Corporation (NYSE:AVNT) Outlook

Market forces rained on the parade of Avient Corporation (NYSE:AVNT) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the consensus from Avient's four analysts is for revenues of US$4.3b in 2022, which would reflect a considerable 14% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to reduce 4.9% to US$2.63 in the same period. Prior to this update, the analysts had been forecasting revenues of US$5.1b and earnings per share (EPS) of US$3.29 in 2022. Indeed, we can see that the analysts are a lot more bearish about Avient's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Avient

It'll come as no surprise then, to learn that the analysts have cut their price target 8.1% to US$52.25. 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. The most optimistic Avient analyst has a price target of US$61.00 per share, while the most pessimistic values it at US$50.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avient's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 11% 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 2.3% annually for the foreseeable future. It's pretty clear that Avient's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Avient. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

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 Avient analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.