It's been a sad week for Gevo, Inc. (NASDAQ:GEVO), who've watched their investment drop 13% to US$0.79 in the week since the company reported its full-year result. The statutory results were mixed overall, with revenues of US$17m in line with analyst forecasts, but losses of US$0.28 per share, some 6.1% larger than the analysts were predicting. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the four analysts covering Gevo are now predicting revenues of US$19.7m in 2024. If met, this would reflect a solid 14% improvement in revenue compared to the last 12 months. Losses are forecast to balloon 24% to US$0.35 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$19.7m and losses of US$0.24 per share in 2024. So it's pretty clear the analysts have mixed opinions on Gevo even after this update; although they reconfirmed their revenue numbers, it came at the cost of a very substantial increase in per-share losses.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 64% to US$1.52, with the analysts signalling that growing losses would be a definite concern. 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. The most optimistic Gevo analyst has a price target of US$2.20 per share, while the most pessimistic values it at US$1.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. For example, we noticed that Gevo's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 14% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 42% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 1.8% annually. Not only are Gevo's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Gevo's future valuation.
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 Gevo analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Gevo that we have uncovered.
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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.