Revenue Beat: Jiangsu Hengrui Medicine Co., Ltd. Exceeded Revenue Forecasts By 12% And Analysts Are Updating Their Estimates

Jiangsu Hengrui Medicine Co., Ltd. (SHSE:600276) last week reported its latest interim results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a mildly positive result, with revenues exceeding expectations at CN¥14b, while statutory earnings per share (EPS) of CN¥0.33 were in line with analyst forecasts. 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. 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 Jiangsu Hengrui Medicine

Taking into account the latest results, the current consensus from Jiangsu Hengrui Medicine's 23 analysts is for revenues of CN¥26.9b in 2024. This would reflect a reasonable 6.7% increase on its revenue over the past 12 months. Per-share earnings are expected to expand 12% to CN¥0.95. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥26.3b and earnings per share (EPS) of CN¥0.88 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of CN¥57.86, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Jiangsu Hengrui Medicine at CN¥120 per share, while the most bearish prices it at CN¥41.90. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. For example, we noticed that Jiangsu Hengrui Medicine's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 14% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 1.0% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually. So while Jiangsu Hengrui Medicine's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Jiangsu Hengrui Medicine's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Jiangsu Hengrui Medicine going out to 2026, and you can see them free on our platform here..

You can also see our analysis of Jiangsu Hengrui Medicine's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.