Applied Digital Corporation (NASDAQ:APLD) Just Reported And Analysts Have Been Cutting Their Estimates

Applied Digital Corporation (NASDAQ:APLD) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Unfortunately, Applied Digital delivered a serious earnings miss. Revenues of US$43m were 17% below expectations, and statutory losses ballooned 564% to US$0.52 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Applied Digital

Taking into account the latest results, the current consensus from Applied Digital's six analysts is for revenues of US$307.2m in 2025. This would reflect a substantial 113% increase on its revenue over the past 12 months. Statutory losses are forecast to balloon 35% to US$0.48 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$589.1m and earnings per share (EPS) of US$0.58 in 2025. So we can see that the consensus has become notably more bearish on Applied Digital's outlook following these results, with a pretty serious reduction to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.

The average price target fell 35% to US$8.71, implicitly signalling that lower earnings per share are a leading indicator for Applied Digital's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Applied Digital, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$5.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Applied Digital's past performance and to peers in the same industry. We would highlight that Applied Digital's revenue growth is expected to slow, with the forecast 83% annualised growth rate until the end of 2025 being well below the historical 122% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.2% per year. So it's pretty clear that, while Applied Digital's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest low-light for us was that the forecasts for Applied Digital dropped from profits to a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Applied Digital going out to 2026, 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 4 warning signs with Applied Digital , and understanding them 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.