A week ago, Maxim Integrated Products, Inc. (NASDAQ:MXIM) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 3.7% to hit US$628m. Maxim Integrated Products reported statutory earnings per share (EPS) US$0.68, which was a notable 12% above what the analysts had forecast. 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.
After the latest results, the 17 analysts covering Maxim Integrated Products are now predicting revenues of US$2.45b in 2021. If met, this would reflect a satisfactory 7.6% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$2.59, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$2.45b and earnings per share (EPS) of US$2.61 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The consensus price target rose 12% to US$93.17despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Maxim Integrated Products' earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Maxim Integrated Products, with the most bullish analyst valuing it at US$101 and the most bearish at US$73.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Maxim Integrated Products shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Maxim Integrated Products' past performance and to peers in the same industry. The analysts are definitely expecting Maxim Integrated Products' growth to accelerate, with the forecast 7.6% growth ranking favourably alongside historical growth of 0.4% 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 9.7% per year. So it's clear that despite the acceleration in growth, Maxim Integrated Products is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Maxim Integrated Products' revenues are 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 Maxim Integrated Products. 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 Maxim Integrated Products going out to 2025, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Maxim Integrated Products that you need to take into consideration.
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