Shanghai Fosun Pharmaceutical (Group) Co., Ltd. Just Missed EPS By 15%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (SHSE:600196), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Shanghai Fosun Pharmaceutical (Group) missed earnings this time around, with CN¥10b revenue coming in 5.0% below what the analysts had modelled. Statutory earnings per share (EPS) of CN¥0.23 also fell short of expectations by 15%. 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 Shanghai Fosun Pharmaceutical (Group)

Following the latest results, Shanghai Fosun Pharmaceutical (Group)'s eight analysts are now forecasting revenues of CN¥42.9b in 2024. This would be a satisfactory 5.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 84% to CN¥1.38. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥45.1b and earnings per share (EPS) of CN¥1.34 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

The consensus has made no major changes to the price target of CN¥29.44, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Shanghai Fosun Pharmaceutical (Group) at CN¥35.00 per share, while the most bearish prices it at CN¥24.50. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Fosun Pharmaceutical (Group)'s past performance and to peers in the same industry. We would highlight that Shanghai Fosun Pharmaceutical (Group)'s revenue growth is expected to slow, with the forecast 7.2% annualised growth rate until the end of 2024 being well below the historical 12% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it seems obvious that Shanghai Fosun Pharmaceutical (Group) is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Shanghai Fosun Pharmaceutical (Group) following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at CN¥29.44, with the latest estimates not enough to have an impact on their price targets.

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 Shanghai Fosun Pharmaceutical (Group) analysts - 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 Fosun Pharmaceutical (Group) 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.