Analysts Just Made A Substantial Upgrade To Their O2Micro International Limited (NASDAQ:OIIM) Forecasts
Shareholders in O2Micro International Limited (NASDAQ:OIIM) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on O2Micro International too, with the stock up 27% to US$6.56 over the past week. Could this upgrade be enough to drive the stock even higher?
After this upgrade, O2Micro International's two analysts are now forecasting revenues of US$95m in 2021. This would be a huge 30% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 175% to US$0.36. Before this latest update, the analysts had been forecasting revenues of US$80m and earnings per share (EPS) of US$0.18 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
See our latest analysis for O2Micro International
It will come as no surprise to learn that the analysts have increased their price target for O2Micro International 14% to US$15.95 on the back of these upgrades. 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 O2Micro International, with the most bullish analyst valuing it at US$23.90 and the most bearish at US$8.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. It's clear from the latest estimates that O2Micro International's rate of growth is expected to accelerate meaningfully, with the forecast 30% revenue growth noticeably faster than its historical growth of 4.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that O2Micro International is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, O2Micro International could be worth investigating further.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2021, which can be seen for 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.
This article by Simply Wall St is general in nature. 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.
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