VeriSilicon Microelectronics (Shanghai) Co., Ltd. (SHSE:688521) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. It was not a great statutory result, with revenues coming in 40% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of CN¥0.41. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the consensus forecast from VeriSilicon Microelectronics (Shanghai)'s nine analysts is for revenues of CN¥3.09b in 2024. This reflects a sizeable 46% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with VeriSilicon Microelectronics (Shanghai) forecast to report a statutory profit of CN¥0.16 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.99b and earnings per share (EPS) of CN¥0.14 in 2024. So it seems there's been a definite increase in optimism about VeriSilicon Microelectronics (Shanghai)'s future following the latest results, with a decent improvement in the earnings per share forecasts in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of CN¥50.14, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on VeriSilicon Microelectronics (Shanghai), with the most bullish analyst valuing it at CN¥70.00 and the most bearish at CN¥26.00 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 clear from the latest estimates that VeriSilicon Microelectronics (Shanghai)'s rate of growth is expected to accelerate meaningfully, with the forecast 66% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect VeriSilicon Microelectronics (Shanghai) to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards VeriSilicon Microelectronics (Shanghai) following these results. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on VeriSilicon Microelectronics (Shanghai). Long-term earnings power is much more important than next year's profits. We have estimates - from multiple VeriSilicon Microelectronics (Shanghai) analysts - going out to 2026, and you can see them free on our platform here.

You can also see whether VeriSilicon Microelectronics (Shanghai) is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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