Shareholders of Pixelworks, Inc. (NASDAQ:PXLW) will be pleased this week, given that the stock price is up 20% to US$0.86 following its latest third-quarter results. The results overall were pretty much dead in line with analyst forecasts; revenues were US$9.5m and statutory losses were US$0.14 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Taking into account the latest results, Pixelworks' three analysts currently expect revenues in 2025 to be US$54.6m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 29% to US$0.33. Before this earnings announcement, the analysts had been modelling revenues of US$65.7m and losses of US$0.37 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

The analysts have cut their price target 29% to US$1.67per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Pixelworks, with the most bullish analyst valuing it at US$2.00 and the most bearish at US$1.50 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. We would highlight that Pixelworks' revenue growth is expected to slow, with the forecast 0.6% annualised growth rate until the end of 2025 being well below the historical 1.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 19% annually. Factoring in the forecast slowdown in growth, it seems obvious that Pixelworks is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. 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 Pixelworks going out to 2025, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 4 warning signs for Pixelworks 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.