Earnings Release: Here's Why Analysts Cut Their Tianma Microelectronics Co., Ltd. (SZSE:000050) Price Target To CN¥6.85

Tianma Microelectronics Co., Ltd. (SZSE:000050) just released its latest second-quarter report and things are not looking great. It was a pretty negative result overall, with revenues of CN¥8.1b missing analyst predictions by 4.5%. Worse, the business reported a statutory loss of CN¥0.08 per share, much larger than the analysts had forecast prior to the result. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 Tianma Microelectronics

Taking into account the latest results, the most recent consensus for Tianma Microelectronics from four analysts is for revenues of CN¥33.7b in 2024. If met, it would imply a modest 4.8% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 70% to CN¥0.14. Yet prior to the latest earnings, the analysts had been forecasting revenues of CN¥34.5b and losses of CN¥0.19 per share in 2024. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a very favorable reduction to losses per share in particular.

The consensus price target fell 7.4% to CN¥6.85, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. 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 Tianma Microelectronics, with the most bullish analyst valuing it at CN¥7.40 and the most bearish at CN¥6.30 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Tianma Microelectronics' growth to accelerate, with the forecast 9.9% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 18% annually. So it's clear that despite the acceleration in growth, Tianma Microelectronics is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Tianma Microelectronics analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Tianma Microelectronics that you need to be mindful of.

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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.