The analysts might have been a bit too bullish on Amlogic (Shanghai) Co.,Ltd. (SHSE:688099), given that the company fell short of expectations when it released its annual results last week. Amlogic (Shanghai)Ltd missed analyst forecasts, with revenues of CN¥5.4b and statutory earnings per share (EPS) of CN¥1.20, falling short by 5.5% and 4.0% respectively. 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.

Taking into account the latest results, the most recent consensus for Amlogic (Shanghai)Ltd from seven analysts is for revenues of CN¥6.52b in 2024. If met, it would imply a sizeable 21% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 44% to CN¥1.72. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥7.53b and earnings per share (EPS) of CN¥2.46 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The analysts made no major changes to their price target of CN¥97.27, suggesting the downgrades are not expected to have a long-term impact on Amlogic (Shanghai)Ltd's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Amlogic (Shanghai)Ltd analyst has a price target of CN¥120 per share, while the most pessimistic values it at CN¥68.80. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Amlogic (Shanghai)Ltd's past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 21% growth on an annualised basis. That is in line with its 21% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 24% per year. So although Amlogic (Shanghai)Ltd is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider 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. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target held steady at CN¥97.27, 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. At Simply Wall St, we have a full range of analyst estimates for Amlogic (Shanghai)Ltd going out to 2025, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Amlogic (Shanghai)Ltd , and understanding it should be part of your investment process.

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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.