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Shareholders will be ecstatic, with their stake up 32% over the past week following Allot Ltd.'s (NASDAQ:ALLT) latest full-year results. Revenues came in at US$110m, in line with expectations, while statutory losses per share were substantially higher than expected, at US$0.25 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the current consensus from Allot's three analysts is for revenues of US$136.1m in 2020, which would reflect a substantial 24% increase on its sales over the past 12 months. Per-share statutory losses are expected to explode, reaching US$0.12 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$122.7m and losses of US$0.13 per share in 2020. So we can see there's been a pretty clear increase in analyst sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.
It will come as no surprise to learn that analysts have increased their price target for Allot 19% to US$12.50 on the back of these upgrades. 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. Currently, the most bullish analyst values Allot at US$14.00 per share, while the most bearish prices it at US$11.50. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Allot's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 24%, well above its historical decline of 2.1% a year over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 12% next year. So it looks like Allot is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to note from these estimates is that the consensus increased its forecast losses next year, suggesting all may not be well at Allot. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Allot. Long-term earnings power is much more important than next year's profits. We have forecasts for Allot going out to 2024, and you can see them free on our platform here.
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