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Here's What Analysts Are Forecasting For Arlo Technologies, Inc. (NYSE:ARLO) After Its Third-Quarter Results
It's been a pretty great week for Arlo Technologies, Inc. (NYSE:ARLO) shareholders, with its shares surging 16% to US$11.92 in the week since its latest quarterly results. It was a pretty bad result overall; while revenues were in line with expectations at US$138m, statutory losses exploded to US$0.04 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Arlo Technologies after the latest results.
Check out our latest analysis for Arlo Technologies
Taking into account the latest results, the consensus forecast from Arlo Technologies' five analysts is for revenues of US$539.8m in 2025. This reflects an okay 2.9% improvement in revenue compared to the last 12 months. Arlo Technologies is also expected to turn profitable, with statutory earnings of US$0.033 per share. In the lead-up to this report, the analysts had been modelling revenues of US$564.0m and earnings per share (EPS) of US$0.20 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$17.80 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Arlo Technologies at US$24.00 per share, while the most bearish prices it at US$15.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arlo Technologies' past performance and to peers in the same industry. We would highlight that Arlo Technologies' revenue growth is expected to slow, with the forecast 2.3% annualised growth rate until the end of 2025 being well below the historical 8.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.3% annually. Factoring in the forecast slowdown in growth, it seems obvious that Arlo Technologies is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Arlo Technologies. 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 held steady at US$17.80, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Arlo Technologies going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - Arlo Technologies has 2 warning signs we think you should be aware of.
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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.
About NYSE:ARLO
Arlo Technologies
Provides cloud-based platform services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific regions.
Flawless balance sheet and fair value.
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