The latest analyst coverage could presage a bad day for Beijing Chunlizhengda Medical Instruments Co., Ltd. (HKG:1858), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. At HK$10.10, shares are up 8.7% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
Following the downgrade, the latest consensus from Beijing Chunlizhengda Medical Instruments' three analysts is for revenues of CN¥1.0b in 2025, which would reflect a major 28% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 55% to CN¥0.51. Prior to this update, the analysts had been forecasting revenues of CN¥1.3b and earnings per share (EPS) of CN¥0.83 in 2025. Indeed, we can see that the analysts are a lot more bearish about Beijing Chunlizhengda Medical Instruments' prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Beijing Chunlizhengda Medical Instruments
It'll come as no surprise then, to learn that the analysts have cut their price target 11% to CN¥10.75. 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. There are some variant perceptions on Beijing Chunlizhengda Medical Instruments, with the most bullish analyst valuing it at CN¥10.84 and the most bearish at CN¥10.67 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Beijing Chunlizhengda Medical Instruments is an easy business to forecast or the underlying assumptions are obvious.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Beijing Chunlizhengda Medical Instruments' past performance and to peers in the same industry. The analysts are definitely expecting Beijing Chunlizhengda Medical Instruments' growth to accelerate, with the forecast 28% annualised growth to the end of 2025 ranking favourably alongside historical growth of 3.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Beijing Chunlizhengda Medical Instruments is expected to grow much faster than its industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Beijing Chunlizhengda Medical Instruments. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Beijing Chunlizhengda Medical Instruments.
That said, the analysts might have good reason to be negative on Beijing Chunlizhengda Medical Instruments, given concerns around earnings quality. For more information, you can click here to discover this and the 1 other risk we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.
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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.