Earnings Miss: Lepu Medical Technology (Beijing) Co., Ltd. Missed EPS By 56% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Lepu Medical Technology (Beijing) Co., Ltd. (SZSE:300003), given that the company fell short of expectations when it released its quarterly results last week. Lepu Medical Technology (Beijing) delivered a grave earnings miss, with both revenues (CN¥1.5b) and statutory earnings per share (CN¥0.12) falling badly short of analyst expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Lepu Medical Technology (Beijing)

Taking into account the latest results, Lepu Medical Technology (Beijing)'s eight analysts currently expect revenues in 2024 to be CN¥7.09b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 36% to CN¥0.73. In the lead-up to this report, the analysts had been modelling revenues of CN¥8.89b and earnings per share (EPS) of CN¥1.07 in 2024. Indeed, we can see that the analysts are a lot more bearish about Lepu Medical Technology (Beijing)'s prospects following the latest results, administering a large cut to revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 16% to CN¥16.99. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Lepu Medical Technology (Beijing) analyst has a price target of CN¥20.00 per share, while the most pessimistic values it at CN¥12.94. 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.

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. We would highlight that Lepu Medical Technology (Beijing)'s revenue growth is expected to slow, with the forecast 0.7% annualised growth rate until the end of 2024 being well below the historical 2.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 19% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Lepu Medical Technology (Beijing).

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Lepu Medical Technology (Beijing). 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Lepu Medical Technology (Beijing)'s future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lepu Medical Technology (Beijing) analysts - 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 Lepu Medical Technology (Beijing) 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.