Rambus Inc. (NASDAQ:RMBS) just released its latest third-quarter results and things are looking bullish. The company beat expectations with revenues of US$218m arriving 2.5% ahead of forecasts. Statutory earnings per share (EPS) were US$0.69, 7.1% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Rambus from eight analysts is for revenues of US$1.01b in 2027. If met, it would imply a huge 27% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 33% to US$3.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$997.6m and earnings per share (EPS) of US$3.21 in 2027. So the consensus seems to have become somewhat more optimistic on Rambus' earnings potential following these results.
View our latest analysis for Rambus
There's been no major changes to the consensus price target of US$141, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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. Currently, the most bullish analyst values Rambus at US$165 per share, while the most bearish prices it at US$103. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rambus' past performance and to peers in the same industry. The analysts are definitely expecting Rambus' growth to accelerate, with the forecast 21% annualised growth to the end of 2027 ranking favourably alongside historical growth of 17% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 27% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Rambus is expected to grow slower than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Rambus following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
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 forecasts for Rambus going out to 2028, 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 Rambus , and understanding this should be part of your investment process.
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