Volta Inc. (NYSE:VLTA) Just Reported, And Analysts Assigned A US$1.21 Price Target

Shareholders of Volta Inc. (NYSE:VLTA) will be pleased this week, given that the stock price is up 10% to US$0.70 following its latest quarterly results. The results weren't stellar - revenue fell 2.4% short of analyst estimates at US$14m, although statutory losses were a relative bright spot. The per-share loss was US$0.25, 13% smaller than the analysts were expecting prior to the result. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Volta after the latest results.

Our analysis indicates that VLTA is potentially overvalued!

Taking into account the latest results, the most recent consensus for Volta from six analysts is for revenues of US$101.2m in 2023 which, if met, would be a substantial 101% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 45% to US$0.81. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$134.6m and losses of US$1.07 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

The consensus price target fell 42% to US$1.21, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Volta at US$2.00 per share, while the most bearish prices it at US$0.50. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Volta's rate of growth is expected to accelerate meaningfully, with the forecast 75% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 43% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Volta to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value 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 forecasts for Volta going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Volta (at least 2 which are potentially serious) , and understanding these should be part of your investment process.

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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.