Yonyou Network Technology Co.,Ltd. (SHSE:600588) Just Reported And Analysts Have Been Cutting Their Estimates

Yonyou Network Technology Co.,Ltd. (SHSE:600588) just released its latest annual report and things are not looking great. Revenues missed expectations somewhat, coming in at CN¥9.2b, but statutory earnings fell catastrophically short, with a loss of CN¥0.62 some 139% larger than what the analysts had predicted. 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.

Taking into account the latest results, the current consensus from Yonyou Network TechnologyLtd's 15 analysts is for revenues of CN¥9.79b in 2025. This would reflect a satisfactory 6.9% increase on its revenue over the past 12 months. Statutory losses are forecast to balloon 74% to CN¥0.16 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥11.7b and earnings per share (EPS) of CN¥0.017 in 2025. So we can see that the consensus has become notably more bearish on Yonyou Network TechnologyLtd's outlook following these results, with a real cut to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.

View our latest analysis for Yonyou Network TechnologyLtd

The analysts lifted their price target 6.5% to CN¥13.18, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's 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 Yonyou Network TechnologyLtd at CN¥20.70 per share, while the most bearish prices it at CN¥7.50. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 Yonyou Network TechnologyLtd's growth to accelerate, with the forecast 6.9% annualised growth to the end of 2025 ranking favourably alongside historical growth of 3.8% 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 18% per year. So it's clear that despite the acceleration in growth, Yonyou Network TechnologyLtd is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts are expecting Yonyou Network TechnologyLtd to become unprofitable next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will 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.

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 Yonyou Network TechnologyLtd going out to 2027, 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 Yonyou Network TechnologyLtd 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.