Pegatron Corporation (TWSE:4938) Analysts Are Pretty Bullish On The Stock After Recent Results

Shareholders of Pegatron Corporation (TWSE:4938) will be pleased this week, given that the stock price is up 14% to NT$100.00 following its latest yearly results. Results were roughly in line with estimates, with revenues of NT$1.3t and statutory earnings per share of NT$5.90. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Pegatron after the latest results.

View our latest analysis for Pegatron

Following last week's earnings report, Pegatron's eleven analysts are forecasting 2024 revenues to be NT$1.27t, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 8.9% to NT$6.42. In the lead-up to this report, the analysts had been modelling revenues of NT$1.34t and earnings per share (EPS) of NT$6.58 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

What's most unexpected is that the consensus price target rose 9.7% to NT$83.39, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. 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 Pegatron, with the most bullish analyst valuing it at NT$94.00 and the most bearish at NT$70.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Pegatron is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pegatron's past performance and to peers in the same industry. It's also worth noting that the years of declining revenue look to have come to an end, with the forecast stauing flat to the end of 2024. Historically, Pegatron's top line has shrunk approximately 1.2% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 16% per year. So it's pretty clear that, although revenues are improving, Pegatron is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pegatron. 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Pegatron analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Pegatron has 1 warning sign we think 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.