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It's been a pretty great week for Allot Ltd. (NASDAQ:ALLT) shareholders, with its shares surging 10% to US$10.06 in the week since its latest third-quarter results. Revenues came in at US$35m, in line with forecasts and the company reported a statutory loss of US$0.07 per share, roughly in line with expectations. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Allot's four analysts is for revenues of US$155.0m in 2021, which would reflect a sizeable 22% increase on its sales over the past 12 months. Allot is also expected to turn profitable, with statutory earnings of US$0.005 per share. Before this earnings announcement, the analysts had been modelling revenues of US$155.0m and losses of US$0.02 per share in 2021. While there's been no material change to the revenue estimates, there's been a pretty clear upgrade to earnings estimates, with the analysts expecting a per-share profit compared to previous expectations of a loss. So it seems like the latest results have led to a significant increase in sentiment for Allot.
There's been no major changes to the consensus price target of US$14.40, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Allot analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$13.60. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. It's clear from the latest estimates that Allot's rate of growth is expected to accelerate meaningfully, with the forecast 22% revenue growth noticeably faster than its historical growth of 5.0%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 Allot to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts now expect Allot to become profitable next year, compared to previous expectations that it would report a loss. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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 Allot. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Allot going out to 2023, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Allot , and understanding it should be part of your investment process.
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.
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