Some Analysts Just Cut Their Alpha Teknova, Inc. (NASDAQ:TKNO) Estimates

Market forces rained on the parade of Alpha Teknova, Inc. (NASDAQ:TKNO) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the five analysts covering Alpha Teknova, is for revenues of US$38m in 2023, which would reflect a perceptible 3.3% reduction in Alpha Teknova's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 38% to US$1.14. Yet before this consensus update, the analysts had been forecasting revenues of US$43m and losses of US$1.10 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Alpha Teknova

The consensus price target fell 24% to US$5.33, implicitly signalling that lower earnings per share are a leading indicator for Alpha Teknova's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alpha Teknova's past performance and to peers in the same industry. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2023, roughly in line with the historical decline of 7.3% per annum over the past year. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.4% annually. So while a broad number of companies are forecast to grow, unfortunately Alpha Teknova is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Alpha Teknova after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Alpha Teknova going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.