Hangzhou First Applied Material Co., Ltd. Just Missed EPS By 11%: Here's What Analysts Think Will Happen Next

The analysts might have been a bit too bullish on Hangzhou First Applied Material Co., Ltd. (SHSE:603806), given that the company fell short of expectations when it released its yearly results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥23b, statutory earnings missed forecasts by 11%, coming in at just CN¥1.00 per share. 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. 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 Hangzhou First Applied Material

Taking into account the latest results, the most recent consensus for Hangzhou First Applied Material from twelve analysts is for revenues of CN¥25.9b in 2024. If met, it would imply a meaningful 15% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 36% to CN¥1.36. In the lead-up to this report, the analysts had been modelling revenues of CN¥28.3b and earnings per share (EPS) of CN¥1.46 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥29.60 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Hangzhou First Applied Material at CN¥35.54 per share, while the most bearish prices it at CN¥18.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 pretty clear that there is an expectation that Hangzhou First Applied Material's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 32% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 23% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Hangzhou First Applied Material.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than 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.

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. At Simply Wall St, we have a full range of analyst estimates for Hangzhou First Applied Material going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Hangzhou First Applied Material (at least 1 which doesn't sit too well with us) , and understanding these should be part of your investment process.

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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.