PDF Solutions, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year
It's been a good week for PDF Solutions, Inc. (NASDAQ:PDFS) shareholders, because the company has just released its latest annual results, and the shares gained 3.9% to US$35.07. It looks like a credible result overall - although revenues of US$166m were in line with what the analysts predicted, PDF Solutions surprised by delivering a statutory profit of US$0.08 per share, a notable 14% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for PDF Solutions
Taking into account the latest results, the consensus forecast from PDF Solutions' four analysts is for revenues of US$183.2m in 2024. This reflects a solid 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 282% to US$0.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$196.8m and earnings per share (EPS) of US$0.42 in 2024. From this we can that 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.
It'll come as no surprise then, to learn that the analysts have cut their price target 6.1% to US$42.25. 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. The most optimistic PDF Solutions analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$40.00. This is a very narrow spread of estimates, implying either that PDF Solutions is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that PDF Solutions' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. Factoring in the forecast slowdown in growth, it seems obvious that PDF Solutions is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for PDF Solutions. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of PDF Solutions' future valuation.
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 PDF Solutions going out to 2025, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for PDF Solutions that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
