It's been a mediocre week for Cohu, Inc. (NASDAQ:COHU) shareholders, with the stock dropping 10% to US$40.01 in the week since its latest first-quarter results. It looks like a credible result overall - although revenues of US$225m were what the analysts expected, Cohu surprised by delivering a (statutory) profit of US$0.61 per share, an impressive 27% above what was forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Cohu

Taking into account the latest results, the consensus forecast from Cohu's six analysts is for revenues of US$932.3m in 2021, which would reflect a substantial 47% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Cohu forecast to report a statutory profit of US$2.00 per share. Before this earnings report, the analysts had been forecasting revenues of US$883.9m and earnings per share (EPS) of US$1.79 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a solid gain to earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$62.00, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Cohu, with the most bullish analyst valuing it at US$77.00 and the most bearish at US$55.00 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.

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 Cohu's rate of growth is expected to accelerate meaningfully, with the forecast 67% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 20% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Cohu to grow faster 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 Cohu's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cohu analysts - going out to 2023, 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 3 warning signs for Cohu that you need to be mindful of.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.