It's been a sad week for Lightning eMotors, Inc. (NYSE:ZEV), who've watched their investment drop 13% to US$3.66 in the week since the company reported its second-quarter result. It was a shocking result from a sales perspective, with revenues falling 48% short of analyst expectations. There was one bright spot though, with Lightning eMotors reporting a surprise (statutory) profit of US$0.35, defying analyst expectations of a loss. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Lightning eMotors' five analysts are now forecasting revenues of US$39.2m in 2022. This would be a sizeable 102% improvement in sales compared to the last 12 months. Losses are forecast to balloon 769% to US$0.26 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$55.6m and losses of US$0.99 per share in 2022. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.
The analysts have cut their price target 6.3% to US$8.90per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Lightning eMotors analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$4.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Lightning eMotors' growth to accelerate, with the forecast 3x annualised growth to the end of 2022 ranking favourably alongside historical growth of 7.7% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Lightning eMotors to grow faster than 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Lightning eMotors' 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 estimates - from multiple Lightning eMotors analysts - going out to 2024, and you can see them free on our platform here.
Even so, be aware that Lightning eMotors is showing 2 warning signs in our investment analysis , you should know about...
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here