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The first-quarter results for SkyWater Technology, Inc. (NASDAQ:SKYT) were released last week, making it a good time to revisit its performance. Results overall were mixed; even though revenues of US$48m beat expectations by 17%, statutory losses were US$0.42 per share, 5.0% larger than what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SkyWater Technology after the latest results.
Taking into account the latest results, the most recent consensus for SkyWater Technology from five analysts is for revenues of US$197.9m in 2022 which, if met, would be a sizeable 21% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 26% to US$1.16. Before this earnings announcement, the analysts had been modelling revenues of US$197.1m and losses of US$1.16 per share in 2022.
As a result, it's unexpected to see that the consensus price target fell 13% to US$12.40, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts. 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 SkyWater Technology analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$7.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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 SkyWater Technology's rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 7.5% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect SkyWater Technology to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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 SkyWater Technology's future valuation.
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. We have forecasts for SkyWater Technology going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with SkyWater Technology (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.
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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.