Investors in Betta Pharmaceuticals Co., Ltd. (SZSE:300558) had a good week, as its shares rose 5.4% to close at CN¥36.01 following the release of its quarterly results. Revenues were CN¥765m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at CN¥0.31, an impressive 63% ahead of estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Betta Pharmaceuticals after the latest results.
After the latest results, the five analysts covering Betta Pharmaceuticals are now predicting revenues of CN¥3.01b in 2024. If met, this would reflect a decent 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 23% to CN¥1.25. Before this earnings report, the analysts had been forecasting revenues of CN¥3.05b and earnings per share (EPS) of CN¥1.08 in 2024. Although the revenue estimates have not really changed, we can see there's been a substantial gain in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target was unchanged at CN¥50.10, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Betta Pharmaceuticals analyst has a price target of CN¥60.00 per share, while the most pessimistic values it at CN¥40.20. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Betta Pharmaceuticals shareholders.
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. The analysts are definitely expecting Betta Pharmaceuticals' growth to accelerate, with the forecast 30% annualised growth to the end of 2024 ranking favourably alongside historical growth of 11% 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 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Betta Pharmaceuticals 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 Betta Pharmaceuticals' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at CN¥50.10, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Betta Pharmaceuticals going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Betta Pharmaceuticals that you should be aware of.
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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.
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