It's been a good week for Coherent, Inc. (NASDAQ:COHR) shareholders, because the company has just released its latest first-quarter results, and the shares gained 6.6% to US$151. Revenues were US$321m, approximately in line with what analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.24, an impressive 33% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Following last week's earnings report, Coherent's ten analysts are forecasting 2020 revenues to be US$1.36b, approximately in line with the last 12 months. Statutory earnings per share are expected to jump 116% to US$2.16. Before this earnings report, analysts had been forecasting revenues of US$1.41b and earnings per share (EPS) of US$2.73 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$175 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Coherent at US$200 per share, while the most bearish prices it at US$154. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how Coherent forecasts compare to the wider market's forecast performance. We would highlight that sales are expected to reverse, with the forecast 0.6% revenue decline a notable change from historical growth of 18% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Coherent to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Coherent going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Coherent's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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