The analysts might have been a bit too bullish on Advanced Micro-Fabrication Equipment Inc. China (SHSE:688012), given that the company fell short of expectations when it released its quarterly results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥1.6b, statutory earnings missed forecasts by an incredible 44%, coming in at just CN¥0.40 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Advanced Micro-Fabrication Equipment China after the latest results.
Following the latest results, Advanced Micro-Fabrication Equipment China's 20 analysts are now forecasting revenues of CN¥8.26b in 2024. This would be a huge 24% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 5.4% to CN¥2.99. Before this earnings report, the analysts had been forecasting revenues of CN¥8.39b and earnings per share (EPS) of CN¥3.18 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥196, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Advanced Micro-Fabrication Equipment China, with the most bullish analyst valuing it at CN¥247 and the most bearish at CN¥148 per share. 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 Advanced Micro-Fabrication Equipment China 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. The analysts are definitely expecting Advanced Micro-Fabrication Equipment China's growth to accelerate, with the forecast 34% annualised growth to the end of 2024 ranking favourably alongside historical growth of 28% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Advanced Micro-Fabrication Equipment China is expected to grow much faster than its 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. The consensus price target held steady at CN¥196, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Advanced Micro-Fabrication Equipment China analysts - going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Advanced Micro-Fabrication Equipment China you should know about.
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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.