Earnings Miss: Montage Technology Co., Ltd. Missed EPS By 13% And Analysts Are Revising Their Forecasts

Montage Technology Co., Ltd. (SHSE:688008) just released its latest quarterly report and things are not looking great. Montage Technology missed earnings this time around, with CN¥737m revenue coming in 4.3% below what the analysts had modelled. Statutory earnings per share (EPS) of CN¥0.20 also fell short of expectations by 13%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Montage Technology after the latest results.

View our latest analysis for Montage Technology

Following the latest results, Montage Technology's 14 analysts are now forecasting revenues of CN¥4.12b in 2024. This would be a huge 58% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 107% to CN¥1.20. In the lead-up to this report, the analysts had been modelling revenues of CN¥4.21b and earnings per share (EPS) of CN¥1.16 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

There's been no real change to the average price target of CN¥71.04, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Montage Technology, with the most bullish analyst valuing it at CN¥100.00 and the most bearish at CN¥60.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Montage Technology's rate of growth is expected to accelerate meaningfully, with the forecast 84% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 23% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Montage Technology to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Montage Technology following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Montage Technology going out to 2026, and you can see them free on our platform here..

You can also see our analysis of Montage Technology's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.