News Flash: 4 Analysts Think Aterian, Inc. (NASDAQ:ATER) Earnings Are Under Threat
One thing we could say about the analysts on Aterian, Inc. (NASDAQ:ATER) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. At US$0.44, shares are up 9.4% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
After the downgrade, the consensus from Aterian's four analysts is for revenues of US$137m in 2023, which would reflect a stressful 28% decline in sales compared to the last year of performance. The loss per share is anticipated to greatly reduce in the near future, narrowing 61% to US$1.02. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$155m and losses of US$0.69 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for Aterian
The consensus price target fell 40% to US$0.75, implicitly signalling that lower earnings per share are a leading indicator for Aterian's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Aterian's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 48% by the end of 2023. This indicates a significant reduction from annual growth of 7.4% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.9% per year. It's pretty clear that Aterian's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Aterian. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Aterian's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Aterian.
That said, the analysts might have good reason to be negative on Aterian, given dilutive stock issuance over the past year. Learn more, and discover the 4 other flags we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
