Broker Revenue Forecasts For Silicon Motion Technology Corporation (NASDAQ:SIMO) Are Surging Higher

Celebrations may be in order for Silicon Motion Technology Corporation (NASDAQ:SIMO) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investors have been pretty optimistic on Silicon Motion Technology too, with the stock up 16% to US$56.09 over the past week. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the current consensus from Silicon Motion Technology's twelve analysts is for revenues of US$679m in 2021 which - if met - would reflect a major 26% increase on its sales over the past 12 months. Per-share earnings are expected to swell 11% to US$3.27. Before this latest update, the analysts had been forecasting revenues of US$590m and earnings per share (EPS) of US$2.89 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Silicon Motion Technology

It will come as no surprise to learn that the analysts have increased their price target for Silicon Motion Technology 24% to US$67.41 on the back of these upgrades. 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 Silicon Motion Technology, with the most bullish analyst valuing it at US$65.00 and the most bearish at US$43.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 Silicon Motion Technology's rate of growth is expected to accelerate meaningfully, with the forecast 26% revenue growth noticeably faster than its historical growth of 2.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.8% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Silicon Motion Technology to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Silicon Motion Technology.

Better yet, our automated discounted cash flow calculation (DCF) suggests Silicon Motion Technology could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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