Yahoo Finance InterDigital, Inc. Just Beat Revenue Estimates By 18%
InterDigital, Inc. (NASDAQ:IDCC) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. InterDigital beat expectations, with revenue hitting US$264m (18% ahead of estimates) and EPS reaching US$2.88 (a 5.0% beat). 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for InterDigital
Following the latest results, InterDigital's four analysts are now forecasting revenues of US$635.9m in 2024. This would be an okay 4.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to plunge 27% to US$5.48 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$634.7m and earnings per share (EPS) of US$5.83 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target fell 7.8% to US$117, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic InterDigital analyst has a price target of US$132 per share, while the most pessimistic values it at US$100.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting InterDigital is an easy business to forecast or the the analysts are all using similar assumptions.
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 pretty clear that there is an expectation that InterDigital's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.5% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. Factoring in the forecast slowdown in growth, it seems obvious that InterDigital is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that InterDigital's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of InterDigital's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on InterDigital. Long-term earnings power is much more important than next year's profits. We have forecasts for InterDigital going out to 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with InterDigital , and understanding this should be part of your investment process.
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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.
