ADTRAN Holdings, Inc. (NASDAQ:ADTN) Analysts Are Pretty Bullish On The Stock After Recent Results

Shareholders might have noticed that ADTRAN Holdings, Inc. (NASDAQ:ADTN) filed its annual result this time last week. The early response was not positive, with shares down 7.8% to US$5.69 in the past week. Revenues were in line with expectations, at US$1.1b, while statutory losses ballooned to US$3.41 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for ADTRAN Holdings

Taking into account the latest results, the current consensus, from the five analysts covering ADTRAN Holdings, is for revenues of US$1.03b in 2024. This implies a definite 9.9% reduction in ADTRAN Holdings' revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 85% to US$0.52. Before this latest report, the consensus had been expecting revenues of US$1.06b and US$0.28 per share in losses. So it's pretty clear the analysts have mixed opinions on ADTRAN Holdings after this update; revenues were downgraded and per-share losses expected to increase.

The analysts lifted their price target 11% to US$9.60, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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 ADTRAN Holdings, with the most bullish analyst valuing it at US$14.00 and the most bearish at US$7.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ADTRAN Holdings' past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 9.9% by the end of 2024. This indicates a significant reduction from annual growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ADTRAN Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.

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 ADTRAN Holdings analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for ADTRAN Holdings that you need to be mindful of.

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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.