Arteris, Inc. (NASDAQ:AIP) Just Reported Earnings, And Analysts Cut Their Target Price

One of the biggest stories of last week was how Arteris, Inc. (NASDAQ:AIP) shares plunged 20% in the week since its latest full-year results, closing yesterday at US$13.52. The business exceeded revenue expectations with sales of US$38m coming in 2.2% ahead of forecasts. Statutory losses were US$1.06 a share, in line with what the analysts predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Arteris

After the latest results, the five analysts covering Arteris are now predicting revenues of US$49.4m in 2022. If met, this would reflect a major 30% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$0.76 per share. Before this latest report, the consensus had been expecting revenues of US$48.7m and US$0.69 per share in losses. So it's pretty clear the analysts have mixed opinions on Arteris even after this update; although they reconfirmed their revenue numbers, it came at the cost of a noticeable increase in per-share losses.

The consensus price target fell 8.6% to US$27.60per share, with the analysts clearly concerned by ballooning losses. 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 Arteris, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$20.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arteris' past performance and to peers in the same industry. It's clear from the latest estimates that Arteris' rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 19% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Arteris is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Arteris' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Arteris analysts - going out to 2024, and you can see them free on our platform here.

Even so, be aware that Arteris is showing 2 warning signs in our investment analysis , you should know about...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.