Transphorm, Inc. (NASDAQ:TGAN) Just Reported And Analysts Have Been Cutting Their Estimates

Transphorm, Inc. (NASDAQ:TGAN) shareholders are probably feeling a little disappointed, since its shares fell 7.9% to US$6.04 in the week after its latest quarterly results. Revenues came in at US$3.7m, in line with forecasts and the company reported a statutory loss of US$0.10 per share, roughly in line with expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Transphorm

Taking into account the latest results, Transphorm's four analysts currently expect revenues in 2023 to be US$18.3m, approximately in line with the last 12 months. Per-share losses are predicted to creep up to US$0.39. Before this latest report, the consensus had been expecting revenues of US$19.5m and US$0.40 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

There was a decent 8.6% increase in the price target to US$7.88, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook. 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. The most optimistic Transphorm analyst has a price target of US$8.00 per share, while the most pessimistic values it at US$7.50. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 0.9% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 36% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.2% annually for the foreseeable future. It's pretty clear that Transphorm's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, long term profitability is more important for the value creation process. 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.

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. At Simply Wall St, we have a full range of analyst estimates for Transphorm going out to 2025, 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 3 warning signs with Transphorm , and understanding them 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.