Infineon Technologies AG (ETR:IFX) came out with its annual results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Revenues of €8.0b were in line with forecasts, although earnings per share (EPS) came in below expectations at €0.75, missing estimates by 8.2%. Following the result, 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. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the latest consensus from Infineon Technologies's 19 analysts is for revenues of €8.43b in 2020, which would reflect an okay 4.9% improvement in sales compared to the last 12 months. Earnings per share are expected to accumulate 4.5% to €0.80. In the lead-up to this report, analysts had been modelling revenues of €8.49b and earnings per share (EPS) of €0.82 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at €20.75, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Infineon Technologies at €28.00 per share, while the most bearish prices it at €15.00. 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.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Infineon Technologies's past performance and to peers in the same market. It's pretty clear that analysts expect Infineon Technologies's revenue growth will slow down substantially, with revenues next year expected to grow 4.9%, compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 6.1% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Infineon Technologies.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at €20.75, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Infineon Technologies going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Infineon Technologies Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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