Methode Electronics, Inc. (NYSE:MEI) Released Earnings Last Week And Analysts Lifted Their Price Target To US$14.67

Methode Electronics, Inc. (NYSE:MEI) just released its quarterly report and things are looking bullish. Results overall were solid, with revenues arriving 9.0% better than analyst forecasts at US$293m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.05 per share, were 9.0% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Methode Electronics

Taking into account the latest results, Methode Electronics' four analysts currently expect revenues in 2025 to be US$1.09b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 87% to US$0.33. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.08b and losses of US$0.70 per share in 2025. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a very promising decrease in losses per share in particular.

The average price target rose 29% to US$14.67, with the analysts signalling that the forecast reduction in losses would be a positive for the stock's valuation. 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 Methode Electronics, with the most bullish analyst valuing it at US$16.00 and the most bearish at US$14.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Methode Electronics' revenue growth is expected to slow, with the forecast 1.1% annualised growth rate until the end of 2025 being well below the historical 2.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.3% annually. Factoring in the forecast slowdown in growth, it seems obvious that Methode Electronics is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Methode Electronics' revenue is expected to perform worse than the wider industry. 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 Methode Electronics going out to 2027, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Methode Electronics (1 is a bit concerning) you should be aware of.

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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.