Results: Monolithic Power Systems, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
A week ago, Monolithic Power Systems, Inc. (NASDAQ:MPWR) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 8.6% to hit US$981m. Monolithic Power Systems reported statutory earnings per share (EPS) US$5.22, which was a notable 11% above what the analysts had forecast. Following the result, the 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Monolithic Power Systems' 14 analysts is for revenues of US$4.08b in 2026. This reflects a sizeable 25% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 38% to US$22.53. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.71b and earnings per share (EPS) of US$19.05 in 2026. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.
See our latest analysis for Monolithic Power Systems
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$1,830, suggesting that the forecast performance does not have a long term impact on the company's 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 Monolithic Power Systems at US$2,100 per share, while the most bearish prices it at US$1,575. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Monolithic Power Systems' growth to accelerate, with the forecast 56% annualised growth to the end of 2026 ranking favourably alongside historical growth of 19% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 24% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Monolithic Power Systems is expected to grow much faster than its 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 Monolithic Power Systems following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Monolithic Power Systems going out to 2028, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Monolithic Power Systems that we have uncovered.
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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.