It's been a pretty great week for Melexis NV (EBR:MELE) shareholders, with its shares surging 11% to €71.35 in the week since its latest full-year results. It was a credible result overall, with revenues of €487m and statutory earnings per share of €1.49 both in line with analyst estimates, showing that Melexis is executing in line with expectations. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Melexis from eight analysts is for revenues of €545.4m in 2020, which is a meaningful 12% increase on its sales over the past 12 months. Statutory earnings per share are expected to soar 30% to €1.93. Before this earnings report, analysts had been forecasting revenues of €547.8m and earnings per share (EPS) of €2.15 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
The consensus price target held steady at €65.63, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Melexis analyst has a price target of €85.00 per share, while the most pessimistic values it at €40.00. 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.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Melexis's performance in recent years. Analysts are definitely expecting Melexis's growth to accelerate, with the forecast 12% growth ranking favourably alongside historical growth of 8.7% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 9.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Melexis is expected to grow at about the same rate as 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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. 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. At Simply Wall St, we have a full range of analyst estimates for Melexis going out to 2023, and you can see them free on our platform here..
You can also see whether Melexis is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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