MGI Tech Co., Ltd. (SHSE:688114) Released Earnings Last Week And Analysts Lifted Their Price Target To CN¥75.79

It's been a pretty great week for MGI Tech Co., Ltd. (SHSE:688114) shareholders, with its shares surging 11% to CN¥81.06 in the week since its latest annual results. MGI Tech beat revenue forecasts by a solid 14%, hitting CN¥3.2b. Statutory losses also blew out, with the loss per share reaching CN¥1.45, some 23% bigger than the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for MGI Tech

Taking into account the latest results, the current consensus from MGI Tech's seven analysts is for revenues of CN¥3.50b in 2025. This would reflect a notable 8.9% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 81% to CN¥0.27. Before this latest report, the consensus had been expecting revenues of CN¥3.55b and CN¥0.24 per share in losses. So it's pretty clear the analysts have mixed opinions on MGI Tech even after this update; although they reconfirmed their revenue numbers, it came at the cost of a considerable increase in per-share losses.

Although the analysts are now forecasting higher losses, the average price target rose 27% to 59.528, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. 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. The most optimistic MGI Tech analyst has a price target of CN¥114 per share, while the most pessimistic values it at CN¥53.92. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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. It's clear from the latest estimates that MGI Tech's rate of growth is expected to accelerate meaningfully, with the forecast 8.9% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 1.5% 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 12% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, MGI Tech is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at MGI Tech. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that MGI Tech's revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on MGI Tech. Long-term earnings power is much more important than next year's profits. We have forecasts for MGI Tech going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with MGI Tech .

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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.