Analysts Have Been Trimming Their PDF Solutions, Inc. (NASDAQ:PDFS) Price Target After Its Latest Report

Simply Wall St
·4 min read

It's been a good week for PDF Solutions, Inc. (NASDAQ:PDFS) shareholders, because the company has just released its latest first-quarter results, and the shares gained 7.7% to US$19.09. It was a pretty bad result overall; while revenues were in line with expectations at US$24m, statutory losses exploded to US$0.21 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for PDF Solutions

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Taking into account the latest results, the current consensus from PDF Solutions' three analysts is for revenues of US$105.3m in 2021, which would reflect a solid 16% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 66% to US$0.45. Before this latest report, the consensus had been expecting revenues of US$105.7m and US$0.40 per share in losses. While this year's revenue estimates held steady, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 16% to US$26.67, with the analysts signalling that growing losses would be a definite concern. 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. The most optimistic PDF Solutions analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$23.00. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that PDF Solutions' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 21% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 4.6% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.5% per year. Not only are PDF Solutions' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of PDF Solutions' future valuation.

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 PDF Solutions analysts - going out to 2023, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for PDF Solutions that you should be aware of.

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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