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Avalara, Inc. (NYSE:AVLR) Released Earnings Last Week And Analysts Lifted Their Price Target To US$175

Simply Wall St
·4 min read

As you might know, Avalara, Inc. (NYSE:AVLR) just kicked off its latest third-quarter results with some very strong numbers. Revenues and losses per share were both better than expected, with revenues of US$128m leading estimates by 10.0%. Statutory losses were smaller than the analystsexpected, coming in at US$0.15 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 Avalara after the latest results.

See our latest analysis for Avalara

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earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Avalara's eleven analysts is for revenues of US$610.7m in 2021, which would reflect a sizeable 32% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.86 per share. Before this earnings announcement, the analysts had been modelling revenues of US$577.0m and losses of US$0.75 per share in 2021. So it's pretty clear the analysts have mixed opinions on Avalara even after this update; although they upped their revenue numbers, it came at the cost of a per-share losses.

The average price target rose 13% to US$175, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. 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. There are some variant perceptions on Avalara, with the most bullish analyst valuing it at US$200 and the most bearish at US$150 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Avalara is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Avalara's rate of growth is expected to accelerate meaningfully, with the forecast 32% revenue growth noticeably faster than its historical growth of 25%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Avalara to grow faster than 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Avalara going out to 2022, 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 4 warning signs for Avalara (1 is concerning!) that you need to be mindful of.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.