Earnings Beat: Pegavision Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week, you might have seen that Pegavision Corporation (TWSE:6491) released its first-quarter result to the market. The early response was not positive, with shares down 2.5% to NT$501 in the past week. It looks like a credible result overall - although revenues of NT$1.7b were what the analysts expected, Pegavision surprised by delivering a (statutory) profit of NT$6.51 per share, an impressive 21% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Pegavision

Following the latest results, Pegavision's four analysts are now forecasting revenues of NT$7.58b in 2024. This would be a reasonable 7.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 19% to NT$27.78. Yet prior to the latest earnings, the analysts had been anticipated revenues of NT$7.88b and earnings per share (EPS) of NT$25.90 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

There's been a 16% lift in the price target to NT$518, with the analysts signalling that the higher earnings forecasts are more relevant to the business than the weaker revenue estimates. 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. Currently, the most bullish analyst values Pegavision at NT$600 per share, while the most bearish prices it at NT$463. This is a very narrow spread of estimates, implying either that Pegavision is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 pretty clear that there is an expectation that Pegavision's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. Compare this to the 57 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it looks like Pegavision is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Pegavision's earnings potential next year. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Still, earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Pegavision. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Pegavision going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Pegavision (1 is a bit concerning!) that you should be aware 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.