As you might know, MGI Tech Co., Ltd. (SHSE:688114) last week released its latest quarterly, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at CN¥660m, but statutory earnings fell catastrophically short, with a loss of CN¥0.40 some 69% larger than what the analysts had predicted. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the current consensus from MGI Tech's six analysts is for revenues of CN¥3.73b in 2025. This would reflect a huge 45% increase on its revenue over the past 12 months. MGI Tech is also expected to turn profitable, with statutory earnings of CN¥0.12 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of CN¥3.85b and losses of CN¥0.0077 per share in 2025. Although the analysts have reduced their revenue expectations, they now expect the business to reach profitability sooner than previously assumed, which makes it look as though there's been a pretty serious improvement in sentiment following the latest results.

The consensus has made no major changes to the price target of CN¥61.30, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on MGI Tech, with the most bullish analyst valuing it at CN¥85.20 and the most bearish at CN¥42.01 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting MGI Tech's growth to accelerate, with the forecast 34% annualised growth to the end of 2025 ranking favourably alongside historical growth of 2.0% per annum 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 14% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect MGI Tech to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts now expect MGI Tech to become profitable next year, compared to previous expectations that it would report a loss. They also downgraded MGI Tech's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings 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.

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. We have estimates - from multiple MGI Tech analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for MGI Tech 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.