The analysts might have been a bit too bullish on Juneyao Airlines Co., Ltd (SHSE:603885), given that the company fell short of expectations when it released its yearly results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥20b, statutory earnings missed forecasts by 17%, coming in at just CN¥0.34 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Juneyao Airlines' twelve analysts is for revenues of CN¥24.6b in 2024. This reflects a substantial 22% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 166% to CN¥0.91. Before this earnings report, the analysts had been forecasting revenues of CN¥25.0b and earnings per share (EPS) of CN¥1.09 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target fell 6.5% to CN¥20.74, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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. The most optimistic Juneyao Airlines analyst has a price target of CN¥26.00 per share, while the most pessimistic values it at CN¥14.70. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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 Juneyao Airlines' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 22% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 2.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 9.3% per year. Not only are Juneyao Airlines' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Juneyao Airlines. Happily, there were no major changes to revenue forecasts, with the business still expected to 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Juneyao Airlines analysts - 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 1 warning sign for Juneyao Airlines 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.