AXT, Inc. (NASDAQ:AXTI) Just Released Its Third-Quarter Results And Analysts Are Updating Their Estimates

One of the biggest stories of last week was how AXT, Inc. (NASDAQ:AXTI) shares plunged 22% in the week since its latest third-quarter results, closing yesterday at US$2.11. The results weren't stellar - revenue fell 9.0% short of analyst estimates at US$24m, although statutory losses were a relative bright spot. The per-share loss was US$0.07, 18% smaller than the analysts were expecting prior to the result. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for AXT

Taking into account the latest results, the most recent consensus for AXT from five analysts is for revenues of US$110.8m in 2025. If met, it would imply a meaningful 17% increase on its revenue over the past 12 months. Earnings are expected to improve, with AXT forecast to report a statutory profit of US$0.39 per share. Before this earnings report, the analysts had been forecasting revenues of US$126.6m and earnings per share (EPS) of US$0.15 in 2025. So there's been quite a change-up of views after the latest results, with the analysts making a serious cut to their revenue forecasts while also granting a sizeable expansion in to the earnings per share numbers.

The consensus has made no major changes to the price target of US$5.30, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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. The most optimistic AXT analyst has a price target of US$6.00 per share, while the most pessimistic values it at US$5.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AXT's past performance and to peers in the same industry. The analysts are definitely expecting AXT's growth to accelerate, with the forecast 13% annualised growth to the end of 2025 ranking favourably alongside historical growth of 1.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 18% per year. So it's clear that despite the acceleration in growth, AXT is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around AXT's earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$5.30, with the latest estimates not enough to have an impact on their price targets.

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 AXT 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 - AXT has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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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.