Huadong Medicine Co., Ltd (SZSE:000963) Yearly Results Just Came Out: Here's What Analysts Are Forecasting For This Year

Investors in Huadong Medicine Co., Ltd (SZSE:000963) had a good week, as its shares rose 8.6% to close at CN¥31.50 following the release of its full-year results. It looks like the results were a bit of a negative overall. While revenues of CN¥41b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.2% to hit CN¥1.62 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Huadong Medicine

Following the latest results, Huadong Medicine's 16 analysts are now forecasting revenues of CN¥44.9b in 2024. This would be a meaningful 10% improvement in revenue compared to the last 12 months. Per-share earnings are expected to swell 19% to CN¥1.93. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥46.0b and earnings per share (EPS) of CN¥2.04 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of CN¥48.81, suggesting the downgrades are not expected to have a long-term impact on Huadong Medicine's valuation. 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 Huadong Medicine at CN¥62.00 per share, while the most bearish prices it at CN¥40.00. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Huadong Medicine's rate of growth is expected to accelerate meaningfully, with the forecast 10% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.2% p.a. 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 15% per year. So it's clear that despite the acceleration in growth, Huadong Medicine 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¥48.81, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Huadong Medicine 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 Huadong Medicine 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.