Results: Ultra Clean Holdings, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

There's been a major selloff in Ultra Clean Holdings, Inc. (NASDAQ:UCTT) shares in the week since it released its full-year report, with the stock down 32% to US$26.49. Revenues were US$2.1b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.52, an impressive 75% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 Ultra Clean Holdings

Taking into account the latest results, the current consensus from Ultra Clean Holdings' four analysts is for revenues of US$2.21b in 2025. This would reflect a reasonable 5.1% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to shoot up 75% to US$0.92. Before this earnings report, the analysts had been forecasting revenues of US$2.30b and earnings per share (EPS) of US$1.32 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 17% to US$48.00. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ultra Clean Holdings, with the most bullish analyst valuing it at US$60.00 and the most bearish at US$40.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Ultra Clean Holdings shareholders.

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. We would highlight that Ultra Clean Holdings' revenue growth is expected to slow, with the forecast 5.1% annualised growth rate until the end of 2025 being well below the historical 9.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Ultra Clean Holdings.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Ultra Clean Holdings' future valuation.

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 Ultra Clean Holdings going out to 2027, and you can see them free on our platform here.

You can also view our analysis of Ultra Clean Holdings' balance sheet, and whether we think Ultra Clean Holdings is carrying too much debt, for free on our platform 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.