The investors in Stem, Inc.‘s (NYSE:STEM) will be rubbing their hands together with glee today, after the share price leapt 28% to US$14.45 in the week following its second-quarter results. Stem beat revenue forecasts by a solid 15%, hitting US$67m. Statutory losses also increased, with a per-share loss of US$0.21, slightly larger than what the analysts were expecting. 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. 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 consensus forecast from Stem’s eight analysts is for revenues of US$386.8m in 2022, which would reflect a huge 93% improvement in sales compared to the last 12 months. The company is forecast to report a statutory loss of US$0.71 in 2022, a sharp decline from a profit over the last year. Before this earnings announcement, the analysts had been modeling revenues of US$386.8m and losses of US$0.71 per share in 2022.
As a result there was no major change to the consensus price target of US$16.50, implying that the business is trading roughly in line with expectations despite ongoing 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 Stem at US$28.00 per share, while the most bearish prices it at US$10.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn’t rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Stem’s growth to accelerate, with the forecast of 272% annualized growth to the end of 2022 ranking favorably alongside historical growth of 221% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue by 11% annually. Factoring in the forecast acceleration in revenue, it’s pretty clear that Stem is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 estimates – from multiple stem analysts – going out to 2024, and you can see them for free on our platform here.
You should always think about risks though. Case in point, we’ve spotted 4 warning signs for Stem you should be aware of, and 1 of them is a bit concerning.
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