One of the biggest stories of last week was how ProFrac Holding Corp. (NASDAQ:ACDC) shares plunged 22% in the week since its latest quarterly results, closing yesterday at US$5.77. The result was fairly weak overall, with revenues of US$579m being 9.3% less than what the analysts had been modelling. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for ProFrac Holding from six analysts is for revenues of US$2.41b in 2024. If met, it would imply a meaningful 8.4% increase on its revenue over the past 12 months. ProFrac Holding is also expected to turn profitable, with statutory earnings of US$0.70 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.50b and earnings per share (EPS) of US$0.70 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The average price target was reduced 5.1% to US$9.25, with the lower revenue forecasts indicating negative sentiment towards ProFrac Holding, even though earnings forecasts were unchanged. 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 ProFrac Holding, with the most bullish analyst valuing it at US$11.00 and the most bearish at US$7.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 ProFrac Holding's revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2024 being well below the historical 38% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.2% annually. Even after the forecast slowdown in growth, it seems obvious that ProFrac Holding is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also downgraded ProFrac Holding's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ProFrac Holding'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 ProFrac Holding analysts - going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for ProFrac Holding you should know about.
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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.