Downgrade: Here's How Analysts See AdTheorent Holding Company, Inc. (NASDAQ:ADTH) Performing In The Near Term

Today is shaping up negative for AdTheorent Holding Company, Inc. (NASDAQ:ADTH) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the current consensus from AdTheorent Holding Company's six analysts is for revenues of US$175m in 2023 which - if met - would reflect a modest 3.5% increase on its sales over the past 12 months. Statutory earnings per share are supposed to plunge 91% to US$0.042 in the same period. Before this latest update, the analysts had been forecasting revenues of US$203m and earnings per share (EPS) of US$0.088 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Our analysis indicates that ADTH is potentially undervalued!

It'll come as no surprise then, to learn that the analysts have cut their price target 37% to US$4.33. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on AdTheorent Holding Company, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$2.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that AdTheorent Holding Company's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past three years. Compare this to the 133 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.3% per year. Factoring in the forecast slowdown in growth, it looks like AdTheorent Holding Company is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of AdTheorent Holding Company.

That said, the analysts might have good reason to be negative on AdTheorent Holding Company, given concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

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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.