Analysts Have Lowered Expectations For ADTRAN Holdings, Inc. (NASDAQ:ADTN) After Its Latest Results

Shareholders in ADTRAN Holdings, Inc. (NASDAQ:ADTN) had a terrible week, as shares crashed 24% to US$4.90 in the week since its latest second-quarter results. It was a pretty bad result overall; while revenues were in line with expectations at US$226m, statutory losses exploded to US$0.63 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ADTRAN Holdings after the latest results.

Check out our latest analysis for ADTRAN Holdings

Taking into account the latest results, the five analysts covering ADTRAN Holdings provided consensus estimates of US$922.5m revenue in 2024, which would reflect a small 2.9% decline over the past 12 months. Losses are predicted to fall substantially, shrinking 48% to US$3.68. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$981.1m and losses of US$0.35 per share in 2024. While this year's revenue estimates dropped there was also a considerable increase to loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target fell 6.7% to US$7.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic ADTRAN Holdings analyst has a price target of US$8.00 per share, while the most pessimistic values it at US$6.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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 revenue is expected to slow, with a forecast annualised decline of 5.7% 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 6.7% 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. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ADTRAN Holdings' future valuation.

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

Even so, be aware that ADTRAN Holdings is showing 1 warning sign in our investment analysis , you should know about...

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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.