As you might know, Maxim Integrated Products, Inc. (NASDAQ:MXIM) just kicked off its latest quarterly results with some very strong numbers. Maxim Integrated Products beat revenue and statutory earnings per share (EPS) expectations, with sales hitting US$619m (14% ahead of estimates) and EPS reaching US$0.63 (a 8.7% beat). 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the twelve analysts covering Maxim Integrated Products are now predicting revenues of US$2.48b in 2021. If met, this would reflect a meaningful 8.9% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$2.57, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$2.26b and earnings per share (EPS) of US$2.48 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$75.47, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Maxim Integrated Products, with the most bullish analyst valuing it at US$86.00 and the most bearish at US$65.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Maxim Integrated Products' rate of growth is expected to accelerate meaningfully, with the forecast 8.9% revenue growth noticeably faster than its historical growth of 0.4%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.6% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Maxim Integrated Products is expected to grow at about the same rate as 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 Maxim Integrated Products' earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Maxim Integrated Products will grow in line with the overall industry. 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 forecasts for Maxim Integrated Products going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Maxim Integrated Products that you need to take into consideration.
This article by Simply Wall St is general in nature. 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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