Investors in Tower Semiconductor Ltd. (NASDAQ:TSEM) had a good week, as its shares rose 6.4% to close at US$225 following the release of its second-quarter results. Revenues were US$460m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.79 were also better than expected, beating analyst predictions by 18%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Following the latest results, Tower Semiconductor's six analysts are now forecasting revenues of US$1.96b in 2026. This would be a solid 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 34% to US$3.45. Before this earnings report, the analysts had been forecasting revenues of US$1.89b and earnings per share (EPS) of US$2.98 in 2026. So it seems there's been a definite increase in optimism about Tower Semiconductor's future following the latest results, with a substantial gain in the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of US$318, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Tower Semiconductor analyst has a price target of US$355 per share, while the most pessimistic values it at US$278. This is a very narrow spread of estimates, implying either that Tower Semiconductor is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Tower Semiconductor's growth to accelerate, with the forecast 32% annualised growth to the end of 2026 ranking favourably alongside historical growth of 0.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 25% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Tower Semiconductor is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tower Semiconductor's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at US$318, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Tower Semiconductor analysts - going out to 2028, and you can see them free on our platform here.

You still need to take note of risks, for example - Tower Semiconductor has 2 warning signs we think you should be aware of.

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.