Last week, you might have seen that Vicor Corporation (NASDAQ:VICR) released its quarterly result to the market. The early response was not positive, with shares down 3.3% to US$33.48 in the past week. It was a credible result overall, with revenues of US$84m and statutory earnings per share of US$0.06 both in line with analyst estimates, showing that Vicor is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Vicor after the latest results.
Following the recent earnings report, the consensus from three analysts covering Vicor is for revenues of US$330.9m in 2024. This implies an uncomfortable 15% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to nosedive 61% to US$0.39 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$352.8m and earnings per share (EPS) of US$0.32 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the sizeable expansion in to the earnings per share numbers.
The consensus price target fell 6.1% to US$38.50, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. 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 Vicor at US$42.00 per share, while the most bearish prices it at US$35.00. This is a very narrow spread of estimates, implying either that Vicor is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. We would highlight that revenue is expected to reverse, with a forecast 20% annualised decline to the end of 2024. That is a notable change from historical growth of 10% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Vicor is expected to lag the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Vicor following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Vicor's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Vicor. Long-term earnings power is much more important than next year's profits. We have forecasts for Vicor going out to 2025, and you can see them free on our platform here.
You can also see our analysis of Vicor's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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.