AUO Corporation (TWSE:2409) Third-Quarter Results: Here's What Analysts Are Forecasting For Next Year

AUO Corporation (TWSE:2409) shareholders are probably feeling a little disappointed, since its shares fell 2.7% to NT$15.95 in the week after its latest third-quarter results. The results don't look great, especially considering that statutory losses grew 234% toNT$0.12 per share. Revenues of NT$78b did beat expectations by 2.5%, but it looks like a bit of a cold comfort. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for AUO

Taking into account the latest results, the most recent consensus for AUO from ten analysts is for revenues of NT$299.1b in 2025. If met, it would imply a meaningful 8.8% increase on its revenue over the past 12 months. AUO is also expected to turn profitable, with statutory earnings of NT$0.25 per share. In the lead-up to this report, the analysts had been modelling revenues of NT$299.5b and earnings per share (EPS) of NT$0.30 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at NT$18.60, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on AUO, with the most bullish analyst valuing it at NT$22.50 and the most bearish at NT$15.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. One thing stands out from these estimates, which is that AUO is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.0% annualised growth until the end of 2025. If achieved, this would be a much better result than the 2.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 14% annually for the foreseeable future. Although AUO's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for AUO. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that AUO's revenue is expected to 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple AUO analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with AUO , and understanding this should be part of your investment process.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.