It's shaping up to be a tough period for Lepu Medical Technology (Beijing) Co., Ltd. (SZSE:300003), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It looks like a weak result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.9b missed by 13%, and statutory earnings per share of CN¥0.26 fell short of forecasts by 4.3%. 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.
Following the latest results, Lepu Medical Technology (Beijing)'s six analysts are now forecasting revenues of CN¥9.40b in 2024. This would be a huge 26% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 76% to CN¥1.08. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥10.7b and earnings per share (EPS) of CN¥1.27 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a substantial drop in earnings per share numbers as well.
The consensus price target fell 11% to CN¥20.69, with the weaker earnings outlook clearly leading valuation estimates. 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 Lepu Medical Technology (Beijing), with the most bullish analyst valuing it at CN¥23.00 and the most bearish at CN¥18.09 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Lepu Medical Technology (Beijing) 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 clear from the latest estimates that Lepu Medical Technology (Beijing)'s rate of growth is expected to accelerate meaningfully, with the forecast 36% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.7% p.a. 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 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Lepu Medical Technology (Beijing) is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Lepu Medical Technology (Beijing). Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. 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.
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 forecasts for Lepu Medical Technology (Beijing) going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Lepu Medical Technology (Beijing) that we have uncovered.
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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.