Party Time: Brokers Just Made Major Increases To Their Holtek Semiconductor Inc. (TPE:6202) Earnings Forecasts

Holtek Semiconductor Inc. (TPE:6202) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Investors have been pretty optimistic on Holtek Semiconductor too, with the stock up 16% to NT$82.40 over the past week. Could this upgrade be enough to drive the stock even higher?

After this upgrade, Holtek Semiconductor's four analysts are now forecasting revenues of NT$6.8b in 2021. This would be a sizeable 21% improvement in sales compared to the last 12 months. Per-share earnings are expected to climb 18% to NT$5.40. Before this latest update, the analysts had been forecasting revenues of NT$5.8b and earnings per share (EPS) of NT$4.47 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Holtek Semiconductor

With these upgrades, we're not surprised to see that the analysts have lifted their price target 12% to NT$84.75 per share. 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 Holtek Semiconductor, with the most bullish analyst valuing it at NT$90.00 and the most bearish at NT$80.00 per share. This is a very narrow spread of estimates, implying either that Holtek Semiconductor 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. The analysts are definitely expecting Holtek Semiconductor's growth to accelerate, with the forecast 21% growth ranking favourably alongside historical growth of 4.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Holtek Semiconductor to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Holtek Semiconductor.

Better yet, our automated discounted cash flow calculation (DCF) suggests Holtek Semiconductor could be moderately undervalued. You can learn more about our valuation methodology on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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