Earnings Release: Here's Why Analysts Cut Their Amplitude, Inc. (NASDAQ:AMPL) Price Target To US$25.50

Amplitude, Inc. (NASDAQ:AMPL) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues and losses per share both beat expectations, with revenues of US$53m leading estimates by 4.4%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at US$0.20 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Amplitude

Taking into account the latest results, the most recent consensus for Amplitude from seven analysts is for revenues of US$233.6m in 2022 which, if met, would be a substantial 25% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$1.20 per share. Before this earnings announcement, the analysts had been modelling revenues of US$232.0m and losses of US$1.01 per share in 2022. While this year's revenue estimates held steady, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target fell 26% to US$25.50per 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 Amplitude, with the most bullish analyst valuing it at US$34.00 and the most bearish at US$22.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Amplitude shareholders.

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. We would highlight that Amplitude's revenue growth is expected to slow, with the forecast 34% annualised growth rate until the end of 2022 being well below the historical 62% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% per year. Even after the forecast slowdown in growth, it seems obvious that Amplitude is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Amplitude. 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 Amplitude's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Amplitude. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Amplitude going out to 2024, and you can see them free on our platform here..

Before you take the next step you should know about the 4 warning signs for Amplitude (1 can't be ignored!) that we have uncovered.

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.