Silicon Laboratories Inc. (NASDAQ:SLAB) Analysts Just Slashed This Year's Revenue Estimates By 11%

One thing we could say about the analysts on Silicon Laboratories Inc. (NASDAQ:SLAB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the consensus from Silicon Laboratories' nine analysts is for revenues of US$901m in 2023, which would reflect a definite 12% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of US$1.0b in 2023. It looks like forecasts have become a fair bit less optimistic on Silicon Laboratories, given the substantial drop in revenue estimates.

Check out our latest analysis for Silicon Laboratories

The consensus price target fell 6.7% to US$160, with the analysts clearly less optimistic about Silicon Laboratories' valuation following this update. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Silicon Laboratories, with the most bullish analyst valuing it at US$190 and the most bearish at US$100.00 per share. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 22% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 4.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. It's pretty clear that Silicon Laboratories' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Silicon Laboratories this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Silicon Laboratories after today.

Hungry for more information? We have estimates for Silicon Laboratories from its nine analysts out until 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.