Tower Semiconductor Ltd. (NASDAQ:TSEM) shareholders are probably feeling a little disappointed, since its shares fell 2.9% to US$44.55 in the week after its latest quarterly results. Tower Semiconductor reported US$371m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.49 beat expectations, being 4.3% higher than what the analysts expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Tower Semiconductor

Taking into account the latest results, the current consensus from Tower Semiconductor's four analysts is for revenues of US$1.57b in 2025. This would reflect a solid 12% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to rise 8.8% to US$2.02. In the lead-up to this report, the analysts had been modelling revenues of US$1.56b and earnings per share (EPS) of US$1.93 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 8.5% to US$57.50. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Tower Semiconductor at US$60.00 per share, while the most bearish prices it at US$50.00. This is a very narrow spread of estimates, implying either that Tower Semiconductor is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Tower Semiconductor's rate of growth is expected to accelerate meaningfully, with the forecast 9.8% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 4.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Tower Semiconductor is expected to grow slower than 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 Tower Semiconductor's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 Tower Semiconductor analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Tower Semiconductor you should be aware of.

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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.