Pony Testing Co., Ltd. Recorded A 8.8% Miss On Revenue: Analysts Are Revisiting Their Models

Pony Testing Co., Ltd. (SZSE:300887) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues came in 8.8% below expectations, at CN¥728m. Statutory earnings per share were relatively better off, with a per-share profit of CN¥0.20 being roughly in line with analyst estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Pony Testing after the latest results.

View our latest analysis for Pony Testing

Taking into account the latest results, the current consensus from Pony Testing's six analysts is for revenues of CN¥2.44b in 2024. This would reflect a major 22% increase on its revenue over the past 12 months. Earnings are expected to improve, with Pony Testing forecast to report a statutory profit of CN¥0.58 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.70b and earnings per share (EPS) of CN¥0.72 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The consensus price target fell 12% to CN¥9.48, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Pony Testing, with the most bullish analyst valuing it at CN¥13.50 and the most bearish at CN¥6.40 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Pony Testing's growth to accelerate, with the forecast 48% annualised growth to the end of 2024 ranking favourably alongside historical growth of 7.8% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Pony Testing 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 Pony Testing. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Pony Testing's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Pony Testing. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Pony Testing analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Pony Testing (1 is potentially serious!) that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.