Azure Power Global Limited (NYSE:AZRE) Released Earnings Last Week And Analysts Lifted Their Price Target To US$32.90

Azure Power Global Limited (NYSE:AZRE) just released its latest quarterly results and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of ₹3.5b leading estimates by 8.1%. Statutory losses were smaller than the analystsexpected, coming in at ₹7.35 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Azure Power Global

Following the latest results, Azure Power Global's five analysts are now forecasting revenues of ₹15.4b in 2021. This would be a meaningful 8.4% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 41% to ₹25.87. Before this latest report, the consensus had been expecting revenues of ₹15.5b and ₹20.39 per share in losses. So it's pretty clear the analysts have mixed opinions on Azure Power Global even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.

Although the analysts are now forecasting higher losses, the average price target rose 10% to ₹29.90, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. 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. There are some variant perceptions on Azure Power Global, with the most bullish analyst valuing it at US$37.00 and the most bearish at US$27.00 per share. 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. It's pretty clear that there is an expectation that Azure Power Global's revenue growth will slow down substantially, with revenues next year expected to grow 8.4%, compared to a historical growth rate of 35% over the past five years. Compare this to the 41 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.6% per year. So it's pretty clear that, while Azure Power Global's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Azure Power Global going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Azure Power Global you should be aware of, and 1 of them is potentially serious.

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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