A week ago, Valens Semiconductor Ltd. (NYSE: VLN) came out with a solid set of third-quarter numbers that could potentially lead to a repricing of the stock. Overall, results were strong, with revenue 2.2% higher than analysts’ forecasts at $23 million. Higher earnings also led to significantly lower statutory losses which, at $0.05 per share, were 2.2% lower than analysts’ expectations. Analysts typically update their forecasts with each earnings report, and we can judge from their estimates if their view of the business has changed or if there are new concerns to consider. With that in mind, we’ve rounded up the latest statutory forecasts to see what analysts expect for next year.
Following the latest results, Valens Semiconductor’s five analysts now forecast revenue of US$114.6 million in 2023. This would represent a considerable 30% improvement in sales over the past 12 months. Losses are expected to drop significantly, narrowing 20% to US$0.23. Prior to this earnings announcement, analysts had modeled revenue of $116.0 million and losses of $0.23 per share in 2023.
The consensus price target remained unchanged at US$10.80, suggesting that the business – losses and all – is performing in line with estimates. The consensus price target is only an average of individual analyst targets, so it might be useful to see how wide the range of the underlying estimates is. There are some different perceptions on Valens Semiconductor, with the most bullish analyst pricing it at US$20.00 and the most bearish at US$5.00 per share. As you can see, the range of estimates is wide, with the lowest valuation accounting for less than half of the most bullish estimate, suggesting that there are strongly divergent views on how the analysts believe that this company will behave. With that in mind, we wouldn’t place too much reliance on the consensus price target, as it’s just an average and analysts clearly have deeply differing views on the company.
Looking now at the big picture, one of the ways we can make sense of these forecasts is to see how they compare to both past performance and industry growth estimates. It is clear from the latest estimates that Valens Semiconductor’s growth rate is set to accelerate significantly, with forecast annualized revenue growth of 24% through the end of 2023 significantly faster than its historical growth of 18%. per year for the past three years. Compare that with other companies in the same industry, which are expected to grow revenue by 7.1% annually. It seems obvious that although growth prospects are brighter than in the recent past, analysts also expect Valens Semiconductor to grow faster than the industry as a whole.
The most important thing to remember is that analysts have reconfirmed their loss per share estimates for next year. Fortunately, they have also reconfirmed their revenue figures, suggesting sales are in line with expectations – and our data suggests revenue is set to grow faster than the industry as a whole. The consensus price target held steady at US$10.80 as the latest estimates were not enough to impact their price targets.
With that in mind, we still believe the longer-term trajectory of the company is much more important for investors to consider. We have estimates – from several Valens Semiconductor analysts – going out to 2024, and you can see them for free on our platform here.
And what about the risks? Every business has them, and we’ve spotted 1 warning sign for Valens Semiconductor you should know.
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Find out if Valens Semiconductor is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
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