Montage Technology Co., Ltd. (SHSE:688008) just released its latest quarterly report and things are not looking great. Montage Technology reported an earnings miss, with CN¥928m revenues falling 10% short of analyst models, and statutory earnings per share (EPS) of CN¥0.32 also coming in slightly below expectations. 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 Montage Technology after the latest results.

Taking into account the latest results, the consensus forecast from Montage Technology's 15 analysts is for revenues of CN¥4.17b in 2024. This reflects a sizeable 38% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 50% to CN¥1.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥4.27b and earnings per share (EPS) of CN¥1.24 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

There's been no real change to the average price target of CN¥76.15, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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 Montage Technology, with the most bullish analyst valuing it at CN¥86.00 and the most bearish at CN¥60.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Montage Technology's rate of growth is expected to accelerate meaningfully, with the forecast 90% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Montage Technology to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Montage Technology's earnings potential next year. They also downgraded Montage Technology's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Montage Technology. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Montage Technology analysts - going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.