Avista Corporation Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Avista Corporation (NYSE:AVA) had a good week, as its shares rose 4.9% to close at US$37.30 following the release of its quarterly results. Revenues came in at US$609m, greatly exceeding expectations even though statutory earnings per share (EPS) of US$0.91 missed forecasts by 9.3%. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Avista

Taking into account the latest results, the four analysts covering Avista provided consensus estimates of US$1.64b revenue in 2024, which would reflect a considerable 13% decline over the past 12 months. Statutory per-share earnings are expected to be US$2.44, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.64b and earnings per share (EPS) of US$2.43 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$39.25. 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 Avista, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$34.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 17% by the end of 2024. This indicates a significant reduction from annual growth of 7.3% 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 4.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Avista is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Avista's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Avista. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Avista analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Avista (1 shouldn't be ignored!) that you need to take into consideration.

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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.