Allot Ltd. (NASDAQ:ALLT) Analysts Just Slashed This Year's Revenue Estimates By 16%

Market forces rained on the parade of Allot Ltd. (NASDAQ:ALLT) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from three analysts covering Allot is for revenues of US$113m in 2023, implying a noticeable 7.6% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$134m of revenue in 2023. The consensus view seems to have become more pessimistic on Allot, noting the measurable cut to revenue estimates in this update.

View our latest analysis for Allot

The consensus price target fell 15% to US$6.50, with the analysts clearly less optimistic about Allot's valuation following this update. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Allot, with the most bullish analyst valuing it at US$11.00 and the most bearish at US$4.00 per share. 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 think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 7.6% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 11% 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 12% annually for the foreseeable future. It's pretty clear that Allot's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Allot after today.

That said, the analysts might have good reason to be negative on Allot, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other concern we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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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