Earnings Miss: Wuhan Keqian Biology Co.,Ltd Missed EPS By 25% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Wuhan Keqian Biology Co.,Ltd (SHSE:688526), given that the company fell short of expectations when it released its full-year results last week. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.1b missed by 16%, and statutory earnings per share of CN¥0.85 fell short of forecasts by 25%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Wuhan Keqian BiologyLtd

After the latest results, the seven analysts covering Wuhan Keqian BiologyLtd are now predicting revenues of CN¥1.31b in 2024. If met, this would reflect a sizeable 23% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 50% to CN¥1.27. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.54b and earnings per share (EPS) of CN¥1.45 in 2024. Indeed, we can see that the analysts are a lot more bearish about Wuhan Keqian BiologyLtd's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 18% to CN¥24.75, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Wuhan Keqian BiologyLtd at CN¥26.00 per share, while the most bearish prices it at CN¥24.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Wuhan Keqian BiologyLtd's growth to accelerate, with the forecast 23% annualised growth to the end of 2024 ranking favourably alongside historical growth of 13% per annum 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 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Wuhan Keqian BiologyLtd is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Wuhan Keqian BiologyLtd's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Wuhan Keqian BiologyLtd analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Wuhan Keqian BiologyLtd you should know about.

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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.