Analysts on tuesday afternoon were stumped by what appeared to be satisfactory financial results that came in ahead of analysts expectations. At 5pm EST the company reported alleged "record" revenue, adj. EBITDA and adj. earnings figured for Q3 of 2015. EPS of $0.27 came in slightly ahead of the analyst consensus of about $0.18.
Robin Manson-Hing of CIBC who was especially incensed. "I was doing some research yesterday to prepare for earnings day and came across reports that high definition 4K cameras are also being manufactured in China. So, I lowered my price target accordingly to reflect that. Now they show numbers ahead of my revised target?"
Indeed, Avigilon seems to have staved off commoditization for for another quarter by offering what they call "end to end" solutions and "video analytics". Revenue came in at 95.1M which was ahead of the consensus 91.6M. BMO analyst Thanos Moschopoulos says this raises a conundrum for analysts who are have a moral obligation to post price targets well ahead of what is actually attainable in any given industry.
"How are we supposed to do our jobs of inflating the market with lofty price targets if the companies we cover actually meet those targets? " Moschopoulos questions. "Do we really want a economic environment where stock prices are actually substantiated by earnings?"
These recent results might mean that analysts will have to acknowledge their miscalculations and revise their price targets upwards to keep well ahead of potential growth in Avigilon. Manson-Hing however is undeterred:
"I mean, you recently had Bradley Bardua, the CFO, resign the DAY before earnings. The fact that they are reporting numbers ahead of estimates definitely points to dodgy accounting practices at work and a failing business. Actually, I'm thinking about lowering my price target again."