Hua Hong Semiconductor Limited Just Missed Earnings - But Analysts Have Updated Their Models

Last week saw the newest quarterly earnings release from Hua Hong Semiconductor Limited (HKG:1347), an important milestone in the company's journey to build a stronger business. Statutory earnings per share fell badly short of expectations, coming in at US$0.005, some 29% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$566m. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the consensus forecast from Hua Hong Semiconductor's 22 analysts is for revenues of US$2.38b in 2025. This reflects a solid 9.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 159% to US$0.047. In the lead-up to this report, the analysts had been modelling revenues of US$2.35b and earnings per share (EPS) of US$0.047 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

Check out our latest analysis for Hua Hong Semiconductor

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 13% to HK$39.46. It looks as though they previously had some doubts over whether the business would live up to their expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Hua Hong Semiconductor analyst has a price target of HK$53.00 per share, while the most pessimistic values it at HK$22.53. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Hua Hong Semiconductor's growth to accelerate, with the forecast 20% annualised growth to the end of 2025 ranking favourably alongside historical growth of 14% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hua Hong Semiconductor to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Hua Hong Semiconductor going out to 2027, and you can see them free on our platform here.

Even so, be aware that Hua Hong Semiconductor is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

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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.