These Analysts Think Allot Ltd.'s (NASDAQ:ALLT) Sales Are Under Threat

The latest analyst coverage could presage a bad day for Allot Ltd. (NASDAQ:ALLT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After the downgrade, the consensus from Allot's three analysts is for revenues of US$113m in 2023, which would reflect a small 7.6% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of US$134m in 2023. The consensus view seems to have become more pessimistic on Allot, noting the measurable cut to revenue estimates in this update.

See our latest analysis for Allot

Notably, the analysts have cut their price target 15% to US$6.50, suggesting concerns around Allot's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Allot analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$4.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 7.6% by the end of 2023. This indicates a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Allot is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Allot's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Allot going forwards.

There might be good reason for analyst bearishness towards Allot, like dilutive stock issuance over the past year. Learn more, and discover the 1 other flag we've identified, for 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.