Yahoo Finance Lantronix, Inc. (NASDAQ:LTRX) Just Reported Third-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?
It's been a pretty great week for Lantronix, Inc. (NASDAQ:LTRX) shareholders, with its shares surging 14% to US$3.69 in the week since its latest quarterly results. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 2.4%to hit US$41m. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Lantronix
Following the latest results, Lantronix's five analysts are now forecasting revenues of US$170.1m in 2025. This would be a meaningful 16% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Lantronix forecast to report a statutory profit of US$0.14 per share. In the lead-up to this report, the analysts had been modelling revenues of US$174.4m and earnings per share (EPS) of US$0.10 in 2025. Although the analysts have lowered their revenue forecasts, they've also made a massive increase in their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.
The consensus has made no major changes to the price target of US$7.60, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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. The most optimistic Lantronix analyst has a price target of US$9.00 per share, while the most pessimistic values it at US$6.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Lantronix's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2025 being well below the historical 25% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.6% annually. So it's pretty clear that, while Lantronix's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Lantronix's earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lantronix analysts - going out to 2025, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Lantronix 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.
