Allegheny Technologies Incorporated (NYSE:ATI) Released Earnings Last Week And Analysts Lifted Their Price Target To US$20.36

Allegheny Technologies Incorporated (NYSE:ATI) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Results overall were solid, with revenues arriving 6.7% better than analyst forecasts at US$693m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.06 per share, were 6.7% smaller than the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Allegheny Technologies

Following the recent earnings report, the consensus from six analysts covering Allegheny Technologies is for revenues of US$2.74b in 2021, implying an uneasy 8.1% decline in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 100% to US$0.05. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$2.74b and losses of US$0.37 per share in 2021. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a very promising decrease in losses per share in particular.

The average price target rose 8.9% to US$20.36, with the analysts signalling that the forecast reduction in losses would be a positive for the stock'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 Allegheny Technologies, with the most bullish analyst valuing it at US$26.00 and the most bearish at US$10.00 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 11% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 3.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.2% annually for the foreseeable future. It's pretty clear that Allegheny Technologies' revenues are expected to perform substantially worse 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Allegheny Technologies going out to 2023, and you can see them free on our platform here.

Even so, be aware that Allegheny Technologies is showing 1 warning sign in our investment analysis , you should know about...

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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