Novatek Microelectronics Corp. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in Novatek Microelectronics Corp. (TWSE:3034) had a good week, as its shares rose 6.0% to close at NT$618 following the release of its first-quarter results. Novatek Microelectronics reported NT$24b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of NT$8.04 beat expectations, being 8.9% higher than what the analysts expected. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Novatek Microelectronics

Taking into account the latest results, the current consensus from Novatek Microelectronics' 19 analysts is for revenues of NT$116.5b in 2024. This would reflect a satisfactory 5.1% increase on its revenue over the past 12 months. Statutory per-share earnings are expected to be NT$38.21, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of NT$115.7b and earnings per share (EPS) of NT$38.12 in 2024. 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at NT$550. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Novatek Microelectronics, with the most bullish analyst valuing it at NT$670 and the most bearish at NT$340 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Novatek Microelectronics' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.9% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Novatek Microelectronics.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Novatek Microelectronics. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Novatek Microelectronics analysts - 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 Novatek 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.