BOE Varitronix Limited (HKG:710) shareholders are probably feeling a little disappointed, since its shares fell 9.1% to HK$5.90 in the week after its latest yearly results. It was a pretty mixed result, with revenues beating expectations to hit HK$13b. Statutory earnings fell 8.9% short of analyst forecasts, reaching HK$0.50 per share. 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. 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 BOE Varitronix's eight analysts is for revenues of HK$15.0b in 2025. This reflects a solid 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 25% to HK$0.62. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$14.6b and earnings per share (EPS) of HK$0.71 in 2025. So it's pretty clear the analysts have mixed opinions on BOE Varitronix after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
Check out our latest analysis for BOE Varitronix
The consensus price target was unchanged at HK$7.74, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. Currently, the most bullish analyst values BOE Varitronix at HK$9.63 per share, while the most bearish prices it at HK$6.88. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BOE Varitronix's past performance and to peers in the same industry. We would highlight that BOE Varitronix's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2025 being well below the historical 25% p.a. growth over the last five years. Compare this to the 79 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. So it's pretty clear that, while BOE Varitronix's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BOE Varitronix. They also upgraded their revenue forecasts, although the latest estimates suggest that BOE Varitronix will grow in line with the overall 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.
With that in mind, we wouldn't be too quick to come to a conclusion on BOE Varitronix. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for BOE Varitronix going out to 2027, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for BOE Varitronix that you need to take into consideration.
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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.