As you might know, Alpha Teknova, Inc. (NASDAQ:TKNO) just kicked off its latest quarterly results with some very strong numbers. Revenues and losses per share both beat expectations, with revenues of US$12m leading estimates by 7.7%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at US$0.22 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the three analysts covering Alpha Teknova provided consensus estimates of US$40.9m revenue in 2022, which would reflect a discernible 3.4% decline on its sales over the past 12 months. Losses are forecast to balloon 53% to US$1.02 per share. Before this latest report, the consensus had been expecting revenues of US$47.0m and US$1.05 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.
The analysts have cut their price target 33% to US$14.00per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Alpha Teknova at US$15.00 per share, while the most bearish prices it at US$13.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Alpha Teknova is an easy business to forecast or the the analysts are all using similar assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 6.6% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 16% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.2% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Alpha Teknova is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, earnings are more important to the intrinsic value of the business. 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 Alpha Teknova. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Alpha Teknova analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for Alpha Teknova you should be aware of, and 1 of them is a bit concerning.
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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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