Analysts Just Made A Major Revision To Their Alchip Technologies, Limited (TPE:3661) Revenue Forecasts

The analysts covering Alchip Technologies, Limited (TPE:3661) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the seven analysts covering Alchip Technologies are now predicting revenues of NT$9.6b in 2021. If met, this would reflect a major 35% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of NT$11b in 2021. It looks like forecasts have become a fair bit less optimistic on Alchip Technologies, given the substantial drop in revenue estimates.

Check out our latest analysis for Alchip Technologies

The consensus price target fell 35% to NT$670, with the analysts clearly less optimistic about Alchip Technologies' valuation following this update. 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 Alchip Technologies analyst has a price target of NT$885 per share, while the most pessimistic values it at NT$450. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alchip Technologies' past performance and to peers in the same industry. The analysts are definitely expecting Alchip Technologies' growth to accelerate, with the forecast 35% annualised growth to the end of 2021 ranking favourably alongside historical growth of 9.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Alchip Technologies to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Alchip Technologies' future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Alchip Technologies going forwards.

Want more information? We have estimates for Alchip Technologies from its seven analysts out until 2023, and you can see them free on our platform here.

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