Earnings Miss: Shanghai Pharmaceuticals Holding Co., Ltd Missed EPS By 30% And Analysts Are Revising Their Forecasts

It's been a good week for Shanghai Pharmaceuticals Holding Co., Ltd (SHSE:601607) shareholders, because the company has just released its latest full-year results, and the shares gained 3.0% to CN¥17.62. Statutory earnings per share fell badly short of expectations, coming in at CN¥1.02, some 30% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at CN¥260b. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Shanghai Pharmaceuticals Holding

Taking into account the latest results, the most recent consensus for Shanghai Pharmaceuticals Holding from seven analysts is for revenues of CN¥289.2b in 2024. If met, it would imply a notable 11% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 26% to CN¥1.28. In the lead-up to this report, the analysts had been modelling revenues of CN¥295.8b and earnings per share (EPS) of CN¥1.72 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥21.14 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Shanghai Pharmaceuticals Holding, with the most bullish analyst valuing it at CN¥26.80 and the most bearish at CN¥12.40 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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 Shanghai Pharmaceuticals Holding's growth to accelerate, with the forecast 11% annualised growth to the end of 2024 ranking favourably alongside historical growth of 9.1% 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 16% per year. So it's clear that despite the acceleration in growth, Shanghai Pharmaceuticals Holding is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥21.14, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Shanghai Pharmaceuticals Holding. 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 Shanghai Pharmaceuticals Holding going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for Shanghai Pharmaceuticals Holding that you need to be mindful 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.