Shareholders in AgroFresh Solutions, Inc. (NASDAQ:AGFS) had a terrible week, as shares crashed 30% to US$1.46 in the week since its latest yearly results. It looks like the results were pretty good overall. While revenues of US$170m were in line with analyst predictions, statutory losses were much smaller than expected, with AgroFresh Solutions losing US$1.21 per share. Following the result, 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 thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from AgroFresh Solutions's twin analysts is for revenues of US$181.5m in 2020, which would reflect a credible 6.7% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 76% to US$0.29 per share. Before this latest report, the consensus had been expecting revenues of US$184.1m and US$0.35 per share in losses. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.
These new estimates led to the consensus price target rising 5.8% to US$5.50, with lower forecast losses suggesting things could be looking up for AgroFresh Solutions.
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 AgroFresh Solutions's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 6.7%, well above its historical decline of 0.9% 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 3.7% next year. Although AgroFresh Solutions's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.
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 AgroFresh Solutions. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that AgroFresh Solutions's revenues are expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
You can also see whether AgroFresh Solutions is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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