Investors in Silicon Motion Technology Corporation (NASDAQ:SIMO) had a good week, as its shares rose 3.7% to close at US$55.57 following the release of its yearly results. The result was positive overall - although revenues of US$804m were in line with what the analysts predicted, Silicon Motion Technology surprised by delivering a statutory profit of US$2.69 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Silicon Motion Technology

Taking into account the latest results, the most recent consensus for Silicon Motion Technology from nine analysts is for revenues of US$826.0m in 2025. If met, it would imply a credible 2.8% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to shrink 6.9% to US$2.51 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$850.9m and earnings per share (EPS) of US$3.09 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

The analysts made no major changes to their price target of US$75.78, suggesting the downgrades are not expected to have a long-term impact on Silicon Motion Technology's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Silicon Motion Technology, with the most bullish analyst valuing it at US$95.00 and the most bearish at US$50.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Silicon Motion Technology's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 7.4% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Silicon Motion Technology.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Silicon Motion Technology. 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. The consensus price target held steady at US$75.78, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Silicon Motion Technology going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Silicon Motion Technology that you need to be mindful 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.