It's been a pretty great week for Inphi Corporation (NYSE:IPHI) shareholders, with its shares surging 20% to US$111 in the week since its latest first-quarter results. The statutory results were not great - while revenues of US$139m were in line with expectations,Inphi lost US$0.44 a share in the process. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Inphi's 13 analysts are now forecasting revenues of US$606.7m in 2020. This would be a major 43% improvement in sales compared to the last 12 months. Losses are supposed to decline, shrinking 18% from last year to US$1.26. Before this latest report, the consensus had been expecting revenues of US$568.7m and US$1.24 per share in losses.
The analysts increased their price target 15% to US$117, perhaps signalling that higher revenues are a strong leading indicator for Inphi'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. Currently, the most bullish analyst values Inphi at US$130 per share, while the most bearish prices it at US$90.00. 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 Inphi shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Inphi's past performance and to peers in the same industry. It's clear from the latest estimates that Inphi's rate of growth is expected to accelerate meaningfully, with the forecast 43% revenue growth noticeably faster than its historical growth of 14%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.0% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Inphi to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Inphi going out to 2022, and you can see them free on our platform here..
Even so, be aware that Inphi is showing 1 warning sign in our investment analysis , you should know about...
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