Monolithic Power Systems, Inc. (NASDAQ:MPWR) Released Earnings Last Week And Analysts Lifted Their Price Target To US$737

It's been a good week for Monolithic Power Systems, Inc. (NASDAQ:MPWR) shareholders, because the company has just released its latest full-year results, and the shares gained 3.1% to US$744. It looks like the results were a bit of a negative overall. While revenues of US$1.8b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.5% to hit US$8.76 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Monolithic Power Systems

Taking into account the latest results, the most recent consensus for Monolithic Power Systems from 14 analysts is for revenues of US$2.04b in 2024. If met, it would imply a meaningful 12% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 3.9% to US$9.13. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.04b and earnings per share (EPS) of US$10.10 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 18% to US$737, suggesting the revised estimates are not indicative of a weaker long-term future for the business. 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. Currently, the most bullish analyst values Monolithic Power Systems at US$830 per share, while the most bearish prices it at US$540. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Monolithic Power Systems' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 27% 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 16% annually. Factoring in the forecast slowdown in growth, it seems obvious that Monolithic Power Systems is also expected to grow slower than other industry participants.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Monolithic Power Systems' revenue is expected to perform worse than the wider industry. 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 in mind, we wouldn't be too quick to come to a conclusion on Monolithic Power Systems. Long-term earnings power is much more important than next year's profits. We have forecasts for Monolithic Power Systems going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Monolithic Power Systems .

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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.