ACV Auctions Inc. (NASDAQ:ACVA) just released its latest quarterly results and things are looking bullish. Results overall were credible, with revenues arriving 3.6% better than analyst forecasts at US$115m. Higher revenues also resulted in lower statutory losses, which were US$0.16 per share, some 3.6% smaller than the analysts expected. 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.
Taking into account the latest results, the current consensus from ACV Auctions' 16 analysts is for revenues of US$431.3m in 2022, which would reflect a reasonable 5.2% increase on its sales over the past 12 months. Per-share losses are predicted to creep up to US$0.70. Before this latest report, the consensus had been expecting revenues of US$453.7m and US$0.70 per share in losses.
The average price target fell 7.6% to US$16.04, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values ACV Auctions at US$23.00 per share, while the most bearish prices it at US$9.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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 pretty clear that there is an expectation that ACV Auctions' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 43% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.2% per year. So it's pretty clear that, while ACV Auctions' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that ACV Auctions' revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ACV Auctions' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for ACV Auctions going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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.
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