Shareholders of MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) will be pleased this week, given that the stock price is up 19% to US$43.26 following its latest full-year results. Results look to have been somewhat negative - revenue fell 6.7% short of analyst estimates at US$495m, although statutory losses were somewhat better. The per-share loss was US$0.69, 22% smaller than the analysts were expecting prior to the result. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from MACOM Technology Solutions Holdings' eleven analysts is for revenues of US$596.4m in 2021, which would reflect a huge 20% increase on its sales over the past 12 months. MACOM Technology Solutions Holdings is also expected to turn profitable, with statutory earnings of US$0.51 per share. In the lead-up to this report, the analysts had been modelling revenues of US$595.0m and earnings per share (EPS) of US$0.17 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.5% to US$45.23. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic MACOM Technology Solutions Holdings analyst has a price target of US$53.00 per share, while the most pessimistic values it at US$32.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting MACOM Technology Solutions Holdings' growth to accelerate, with the forecast 20% growth ranking favourably alongside historical growth of 0.2% per annum 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 9.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect MACOM Technology Solutions Holdings to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around MACOM Technology Solutions Holdings' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for MACOM Technology Solutions Holdings going out to 2023, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for MACOM Technology Solutions Holdings you should know about.
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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