Pixelworks, Inc. (NASDAQ:PXLW) Just Reported And Analysts Have Been Cutting Their Estimates

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Explore Pixelworks's Fair Values from the Community and select yours
It's been a good week for Pixelworks, Inc. (NASDAQ:PXLW) shareholders, because the company has just released its latest second-quarter results, and the shares gained 4.3% to US$9.54. It was a moderately negative result overall - revenue fell 2.9% short of analyst estimates at US$8.3m, although at least statutory losses were marginally smaller than expected, at US$1.27 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
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Following the latest results, Pixelworks' three analysts are now forecasting revenues of US$35.5m in 2025. This would be a credible 4.6% improvement in revenue compared to the last 12 months. Losses are expected to be contained, narrowing 11% from last year to US$4.65. Before this latest report, the consensus had been expecting revenues of US$44.6m and US$4.44 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
Check out our latest analysis for Pixelworks
The average price target fell 37% to US$11.67, implicitly signalling that lower earnings per share are a leading indicator for Pixelworks' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Pixelworks at US$13.00 per share, while the most bearish prices it at US$10.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Pixelworks' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 9.5% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 0.2% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 17% per year. So although Pixelworks' revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Pixelworks. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Pixelworks going out to 2026, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Pixelworks (1 is a bit concerning) you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.
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