Allegro shares drop on weaker Q3 growth outlook

Investing.com -- Shares of Allegro (WA:ALEP ) fell on Thursday following the company's forecast of a slowdown in earnings growth for the third quarter of 2024.

At 5:12 am (0912 GMT), Allegro was trading 7.8% lower at PLN 35.70.

The company expects Polish GMV growth to decelerate to a range of 10-11%, falling short of the 12% anticipated by consensus. 

Revenue growth in Poland is projected to be between 16-18%, below the 19% forecasted by analysts. 

Additionally, adjusted EBITDA growth in Poland is anticipated to slow to 11-13%, significantly lower than the 15% expected by the market.

At the consolidated level, Allegro's guidance includes GMV growth of 9-10%, which is below the 12% expected by consensus. 

Revenue growth is forecasted to be between 8-10%, compared to the 12% projected by analysts. 

Adjusted EBITDA growth is anticipated to be 5-8%, falling short of the 12% forecasted by the market.

“Some profit-taking in the shares may be on the cards as earnings growth has peaked with no immediate upside to the Street’s FY24 expectations implied from the 3Q24 guidance and as international losses do not seem to have bottomed out,” said analysts at J.P.Morgan in a note.

In its second-quarter results, Allegro reported solid performance, exceeding expectations in key areas. The company's Polish GMV grew by 12% year-over-year to PLN 15 billion, slightly surpassing both company guidance and consensus estimates. 

Adjusted EBITDA in Poland was at PLN 908 million, reflecting a 35% increase compared to the previous year. This was not only 4% ahead of consensus but also above the company's initial guidance of 26-29% growth. 

On a group level, consolidated adjusted EBITDA stood at PLN 763 million, marking a 32% year-over-year increase and exceeding consensus estimates by 3%. 

However, international operations reported an adjusted EBITDA loss of PLN 145 million, which was in line with the consensus forecast of a PLN 138 million loss.

“2Q24 results alone are strong but the soft guidance is likely to take precedence as it is likely to result in consensus downgrades,” said analysts at UBS.

Source: Investing.com