It's been a good week for Axcelis Technologies, Inc. (NASDAQ:ACLS) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.4% to US$25.56. Revenues were US$119m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.33 were also better than expected, beating analyst predictions by 10%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Axcelis Technologies' five analysts are now forecasting revenues of US$441.0m in 2020. This would be a notable 19% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 39% to US$0.94. Before this earnings report, the analysts had been forecasting revenues of US$449.6m and earnings per share (EPS) of US$1.07 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 9.0% to US$29.20, suggesting the revised estimates are not indicative of a weaker long-term future for the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Axcelis Technologies analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$20.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Axcelis Technologies shareholders.
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 clear from the latest estimates that Axcelis Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 19% revenue growth noticeably faster than its historical growth of 9.7%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.9% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Axcelis Technologies to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Axcelis Technologies going out to 2021, and you can see them free on our platform here..
Before you take the next step you should know about the 2 warning signs for Axcelis Technologies that we have uncovered.
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