Analyst Estimates: Here's What Brokers Think Of Silicon Motion Technology Corporation (NASDAQ:SIMO) After Its Yearly Report

It's been a good week for Silicon Motion Technology Corporation (NASDAQ:SIMO) shareholders, because the company has just released its latest annual results, and the shares gained 3.7% to US$55.57. Silicon Motion Technology reported US$804m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.69 beat expectations, being 3.2% higher than what the analysts expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Silicon Motion Technology

Taking into account the latest results, the current consensus from Silicon Motion Technology's nine analysts is for revenues of US$826.0m in 2025. This would reflect a reasonable 2.8% increase on its revenue over the past 12 months. Statutory earnings per share are expected to shrink 6.9% to US$2.51 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$850.9m and earnings per share (EPS) of US$3.09 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

The analysts made no major changes to their price target of US$75.78, suggesting the downgrades are not expected to have a long-term impact on Silicon Motion Technology's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Silicon Motion Technology analyst has a price target of US$95.00 per share, while the most pessimistic values it at US$50.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Silicon Motion Technology's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 7.4% 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 17% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Silicon Motion Technology.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Silicon Motion Technology. 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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Silicon Motion Technology going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Silicon Motion Technology , and understanding it should be part of your investment process.

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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.