There's been a notable change in appetite for Intevac, Inc. (NASDAQ:IVAC) shares in the week since its full-year report, with the stock down 19% to US$6.00. It looks like a credible result overall - although revenues of US$109m were what analysts expected, Intevac surprised by delivering a (statutory) profit of US$0.05 per share, an impressive 114% above what analysts had forecast. 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 gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
After the latest results, the three analysts covering Intevac are now predicting revenues of US$117.4m in 2020. If met, this would reflect an okay 7.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to soar 513% to US$0.30. In the lead-up to this report, analysts had been modelling revenues of US$121.3m and earnings per share (EPS) of US$0.27 in 2020. While revenue forecasts have been revised downwards, analysts look to have become more optimistic on the company's earnings power, given the substantial gain in to earnings per share forecasts.
The average analyst price target rose 15% to US$9.00, with analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. 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 Intevac, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$9.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Next year brings more of the same, according to analysts, with revenue forecast to grow 7.9%, in line with its 9.7% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the are forecast to see their revenues grow 6.3% per year. So although Intevac is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Intevac's earnings potential next year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Intevac going out to 2021, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.