Altair Engineering Inc. (NASDAQ:ALTR) just released its latest third-quarter results and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of US$106m leading estimates by 7.7%. Statutory losses were smaller than the analystsexpected, coming in at US$0.12 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Altair Engineering's eight analysts is for revenues of US$488.5m in 2021, which would reflect a modest 6.1% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 35% to US$0.12. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$490.1m and losses of US$0.16 per share in 2021. Although the revenue estimates have not really changed Altair Engineering'sfuture looks a little different to the past, with a the loss per share forecasts in particular.
These new estimates led to the consensus price target rising 8.5% to US$49.00, with lower forecast losses suggesting things could be looking up for Altair Engineering. 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. There are some variant perceptions on Altair Engineering, with the most bullish analyst valuing it at US$53.00 and the most bearish at US$37.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Altair Engineering's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Altair Engineering's revenue growth will slow down substantially, with revenues next year expected to grow 6.1%, compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. Factoring in the forecast slowdown in growth, it seems obvious that Altair Engineering is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Altair Engineering going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Altair Engineering that you should be aware of.
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