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US$11.90: That's What Analysts Think Valens Semiconductor Ltd. (NYSE:VLN) Is Worth After Its Latest Results

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A week ago, Valens Semiconductor Ltd. (NYSE:VLN) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 4.2% better than analyst forecasts at US$22m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.05 per share, were 4.2% smaller than the analysts expected. The 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Valens Semiconductor

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for Valens Semiconductor from five analysts is for revenues of US$86.5m in 2022 which, if met, would be a notable 9.6% increase on its sales over the past 12 months. Per-share losses are predicted to creep up to US$0.40. Before this latest report, the consensus had been expecting revenues of US$84.1m and US$0.36 per share in losses. So it's pretty clear consensus is mixed on Valens Semiconductor after the new consensus numbers; while the analysts lifted revenue numbers, they also administered a modest increase to per-share loss expectations.

Spiting the revenue upgrading, the average price target fell 5.6% to US$11.90, clearly signalling that higher forecast losses are a valuation concern. 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. There are some variant perceptions on Valens Semiconductor, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$8.50 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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 pretty clear that there is an expectation that Valens Semiconductor's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 13% growth on an annualised basis. This is compared to a historical growth rate of 38% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.5% per year. So it's pretty clear that, while Valens Semiconductor's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Valens Semiconductor. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Valens Semiconductor. Long-term earnings power is much more important than next year's profits. We have forecasts for Valens Semiconductor going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Valens Semiconductor that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.