It's been a good week for PDF Solutions, Inc. (NASDAQ:PDFS) shareholders, because the company has just released its latest first-quarter results, and the shares gained 8.3% to US$34.29. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the four analysts covering PDF Solutions are now predicting revenues of US$182.0m in 2024. If met, this would reflect a solid 9.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 242% to US$0.21. In the lead-up to this report, the analysts had been modelling revenues of US$183.2m and earnings per share (EPS) of US$0.31 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
The average price target fell 6.1% to US$42.25, with reduced earnings forecasts clearly tied to a lower valuation estimate. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on PDF Solutions, with the most bullish analyst valuing it at US$45.00 and the most bearish at US$40.00 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. 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 13% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% per year. 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that PDF Solutions' revenue is expected to perform worse 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.
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 PDF Solutions going out to 2025, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for PDF Solutions that you should be aware of.
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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.