Party Time: Brokers Just Made Major Increases To Their Livent Corporation (NYSE:LTHM) Earnings Forecasts

Livent Corporation (NYSE:LTHM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. It will be interesting to see if the latest numbers are enough to change investors' appetite for Livent. Over the past week the stock price has fallen 5.1% to US$21.01.

Following the upgrade, the latest consensus from Livent's twelve analysts is for revenues of US$578m in 2022, which would reflect a sizeable 38% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 16,450% to US$0.61. Prior to this update, the analysts had been forecasting revenues of US$516m and earnings per share (EPS) of US$0.46 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Livent

Despite these upgrades, the analysts have not made any major changes to their price target of US$29.29, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Livent at US$41.00 per share, while the most bearish prices it at US$23.00. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Livent is forecast to grow faster in the future than it has in the past, with revenues expected to display 38% annualised growth until the end of 2022. If achieved, this would be a much better result than the 1.2% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 5.1% per year. So it looks like Livent is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Livent.

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 Livent 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.