Results: Betta Pharmaceuticals Co., Ltd. Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a good week for Betta Pharmaceuticals Co., Ltd. (SZSE:300558) shareholders, because the company has just released its latest second-quarter results, and the shares gained 5.4% to CN¥36.01. It looks like a credible result overall - although revenues of CN¥765m were what the analysts expected, Betta Pharmaceuticals surprised by delivering a (statutory) profit of CN¥0.31 per share, an impressive 63% above what was forecast. 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.

See our latest analysis for Betta Pharmaceuticals

After the latest results, the five analysts covering Betta Pharmaceuticals are now predicting revenues of CN¥3.01b in 2024. If met, this would reflect a meaningful 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 23% to CN¥1.25. In the lead-up to this report, the analysts had been modelling revenues of CN¥3.05b and earnings per share (EPS) of CN¥1.08 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice gain to earnings per share expectations following these results.

The consensus price target was unchanged at CN¥50.10, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Betta Pharmaceuticals analyst has a price target of CN¥60.00 per share, while the most pessimistic values it at CN¥40.20. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. It's clear from the latest estimates that Betta Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Betta Pharmaceuticals to grow faster than the wider industry.

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 Betta Pharmaceuticals following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at CN¥50.10, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Betta Pharmaceuticals going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Betta Pharmaceuticals that we have uncovered.

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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.

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