Yahoo Finance Earnings Update: Here's Why Analysts Just Lifted Their Alight, Inc. (NYSE:ALIT) Price Target To US$13.93
Investors in Alight, Inc. (NYSE:ALIT) had a good week, as its shares rose 3.2% to close at US$9.89 following the release of its yearly results. It was a pretty bad result overall; while revenues were in line with expectations at US$3.1b, statutory losses exploded to US$0.14 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Alight after the latest results.
Check out our latest analysis for Alight
Taking into account the latest results, the most recent consensus for Alight from seven analysts is for revenues of US$3.48b in 2023 which, if met, would be a decent 11% increase on its sales over the past 12 months. Per-share statutory losses are expected to explode, reaching US$0.064 per share. Before this earnings report, the analysts had been forecasting revenues of US$3.37b and earnings per share (EPS) of US$0.042 in 2023. While they've upgraded their revenue numbers for next year, the consensus also expects losses to increase, perhaps due to the investments required to grow revenue. In any event, it's not clear that these new estimates are particularly bullish.
The average price target rose 9.6% to US$13.93, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Alight at US$16.00 per share, while the most bearish prices it at US$11.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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 Alight's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2023 being well below the historical 102% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% per year. Even after the forecast slowdown in growth, it seems obvious that Alight is also expected to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Alight dropped from profits to a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Alight analysts - going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Alight 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.
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