The broker has significantly cut its earnings forecast for Taiwan Surface Mount Technology Co., Ltd. (TWSE:6278).

Analyst Coverage Taiwan Surface Mount Technology Co., Ltd. (TWSE:6278) today sent a negative message to shareholders by making a significant revision to its statutory forecasts for the year, with both revenue and earnings per share (EPS) forecasts revised down and analysts seeing dark clouds gathering on the horizon.

Following the downgrade, the latest consensus from Taiwan Surface Mount Technology's sole analyst is for revenues of NT$49b in 2024, reflecting a credible 2.6% increase in sales compared to the last 12 months. Statutory earnings per share are now expected to fall 11% to NT$8.83 over the same period. Previously, analysts had forecast revenues of NT$65b and earnings per share (EPS) of NT$14.95 in 2024. We can see that analysts are in fact quite pessimistic about Taiwan Surface Mount Technology's prospects, slashing their revenue forecasts and also cutting their EPS forecasts substantially.

Read our latest analysis on Taiwan Surface Mount Technology

Despite the cut in expected earnings, there was no material change to the target price of NT$126, indicating that the analysts do not believe these changes will have a significant impact on the intrinsic value.

While these estimates are interesting, it is useful to paint a broader picture when comparing forecasts to Taiwan Surface Mount Technology's past performance and industry peers. Taiwan Surface Mount Technology's revenue growth is expected to slow significantly, with revenues expected to grow at an annualized rate of 3.5% through the end of 2024. This compares to a historic growth rate of 11% over the past five years. Comparing this to other companies in the industry (with analyst forecasts), the overall industry is expected to grow at a 12% annual rate. So, while revenue growth is expected to slow, it is clear that the industry as a whole is also expected to grow at a faster pace than Taiwan Surface Mount Technology.

Conclusion

The biggest issue with the new forecasts is that analysts have lowered their earnings per share forecasts, suggesting headwinds for Taiwan SMT's business. Unfortunately, analysts have also lowered their revenue forecasts, and industry data suggests Taiwan SMT's revenue is expected to grow more slowly than the overall market. It's puzzling, given the downward revision in the target price, but with the stock expected to fall significantly this year, it's not surprising investors are a little wary of Taiwan SMT.

Having said that, the longer term trajectory of the company's earnings is much more important than next year – at least one analyst has provided forecasts out to 2025, and you can see them free on our platform.

Of course, looking at the company's management Invest a large amount of money Knowing whether analysts' forecasts in the stock market are being revised downwards is just as useful as knowing whether analysts are revising their forecasts downwards. free A list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.