Results: ELAN Microelectronics Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

Investors in ELAN Microelectronics Corporation (TWSE:2458) had a good week, as its shares rose 2.9% to close at NT$141 following the release of its second-quarter results. Revenues NT$3.2b disappointed slightly, at2.3% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of NT$2.56 coming in 17% above what was anticipated. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for ELAN Microelectronics

Taking into account the latest results, ELAN Microelectronics' five analysts currently expect revenues in 2024 to be NT$12.7b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 7.5% to NT$8.93 in the same period. In the lead-up to this report, the analysts had been modelling revenues of NT$13.3b and earnings per share (EPS) of NT$9.50 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

It'll come as no surprise then, to learn that the analysts have cut their price target 6.8% to NT$178. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on ELAN Microelectronics, with the most bullish analyst valuing it at NT$205 and the most bearish at NT$150 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ELAN Microelectronics shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ELAN Microelectronics' past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.3% by the end of 2024. This indicates a significant reduction from annual growth of 2.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. It's pretty clear that ELAN Microelectronics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for ELAN Microelectronics going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for ELAN Microelectronics 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.