Yahoo Finance Piedmont Lithium Inc. (ASX:PLL) Just Reported And Analysts Have Been Cutting Their Estimates
Shareholders in Piedmont Lithium Inc. (ASX:PLL) had a terrible week, as shares crashed 24% to AU$0.11 in the week since its latest second-quarter results. It was a negative result overall, with revenues coming in 19% less than what the analysts expected, at US$13m. Following the result, the 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Piedmont Lithium
Taking into account the latest results, the consensus forecast from Piedmont Lithium's seven analysts is for revenues of US$114.8m in 2024. This reflects a sizeable 73% improvement in revenue compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.0099 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$121.8m and earnings per share (EPS) of US$0.093 in 2024. The analysts have made an abrupt about-face on Piedmont Lithium, administering a minor downgrade to to revenue forecasts and slashing the earnings outlook from a profit to loss.
The average price target fell 17% to AU$0.25, implicitly signalling that lower earnings per share are a leading indicator for Piedmont Lithium's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Piedmont Lithium, with the most bullish analyst valuing it at AU$0.35 and the most bearish at AU$0.15 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Piedmont Lithium's growth to accelerate, with the forecast 199% annualised growth to the end of 2024 ranking favourably alongside historical growth of 95% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Piedmont Lithium to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Piedmont Lithium dropped from profits to a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Piedmont Lithium. Long-term earnings power is much more important than next year's profits. We have forecasts for Piedmont Lithium going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Piedmont Lithium that you need to take into consideration.
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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.
