Some Suzhou Zelgen Biopharmaceuticals Co.,Ltd. (SHSE:688266) Analysts Just Made A Major Cut To Next Year's Estimates

The analysts covering Suzhou Zelgen Biopharmaceuticals Co.,Ltd. (SHSE:688266) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 7.4% to CN¥61.48 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the most recent consensus for Suzhou Zelgen BiopharmaceuticalsLtd from its four analysts is for revenues of CN¥624m in 2024 which, if met, would be a substantial 53% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 11% per share from last year to CN¥0.78. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥699m and losses of CN¥0.63 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Suzhou Zelgen BiopharmaceuticalsLtd

The consensus price target was broadly unchanged at CN¥67.00, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 53% growth on an annualised basis. That is in line with its 56% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 24% annually. So it's pretty clear that Suzhou Zelgen BiopharmaceuticalsLtd is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Suzhou Zelgen BiopharmaceuticalsLtd. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Suzhou Zelgen BiopharmaceuticalsLtd.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Suzhou Zelgen BiopharmaceuticalsLtd analysts - going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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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.