Results: Tower Semiconductor Ltd. Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders will be ecstatic, with their stake up 22% over the past week following Tower Semiconductor Ltd.'s (NASDAQ:TSEM) latest third-quarter results. Tower Semiconductor reported US$396m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.47 beat expectations, being 5.6% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Following the latest results, Tower Semiconductor's five analysts are now forecasting revenues of US$1.83b in 2026. This would be a sizeable 21% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 43% to US$2.50. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.77b and earnings per share (EPS) of US$2.43 in 2026. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Check out our latest analysis for Tower Semiconductor

With these upgrades, we're not surprised to see that the analysts have lifted their price target 58% to US$124per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Tower Semiconductor, with the most bullish analyst valuing it at US$135 and the most bearish at US$114 per share. 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. It's clear from the latest estimates that Tower Semiconductor's rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 1.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. Tower Semiconductor is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tower Semiconductor's earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Tower Semiconductor will grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Tower Semiconductor. Long-term earnings power is much more important than next year's profits. We have forecasts for Tower Semiconductor going out to 2027, and you can see them free on our platform here.

We also provide an overview of the Tower Semiconductor Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.