Shareholders in Espressif Systems (Shanghai) Co., Ltd. (SHSE:688018) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

After this upgrade, Espressif Systems (Shanghai)'s five analysts are now forecasting revenues of CN¥2.1b in 2024. This would be a major 23% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 56% to CN¥3.22. Previously, the analysts had been modelling revenues of CN¥1.8b and earnings per share (EPS) of CN¥1.82 in 2024. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

It will come as no surprise to learn that the analysts have increased their price target for Espressif Systems (Shanghai) 30% to CN¥119 on the back of these upgrades.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Espressif Systems (Shanghai)'s rate of growth is expected to accelerate meaningfully, with the forecast 51% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 17% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 22% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Espressif Systems (Shanghai) to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Espressif Systems (Shanghai).

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Espressif Systems (Shanghai) analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.

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