Results: Fositek Corp. Exceeded Expectations And The Consensus Has Updated Its Estimates

Investors in Fositek Corp. (TWSE:6805) had a good week, as its shares rose 6.6% to close at NT$743 following the release of its quarterly results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at NT$1.7b, statutory earnings beat expectations by a notable 31%, coming in at NT$3.75 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Fositek

Taking into account the latest results, the consensus forecast from Fositek's five analysts is for revenues of NT$9.17b in 2024. This reflects a major 35% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 58% to NT$19.64. Before this earnings report, the analysts had been forecasting revenues of NT$9.83b and earnings per share (EPS) of NT$20.32 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.

The analysts made no major changes to their price target of NT$1,019, suggesting the downgrades are not expected to have a long-term impact on Fositek's valuation. 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 Fositek, with the most bullish analyst valuing it at NT$1,096 and the most bearish at NT$916 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Fositek's rate of growth is expected to accelerate meaningfully, with the forecast 84% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Fositek to grow faster 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at NT$1,019, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Fositek. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Fositek going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Fositek that 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.