Yonyou Network Technology Co.,Ltd. (SHSE:600588) Just Reported Earnings, And Analysts Cut Their Target Price

Last week, you might have seen that Yonyou Network Technology Co.,Ltd. (SHSE:600588) released its second-quarter result to the market. The early response was not positive, with shares down 4.5% to CN¥8.31 in the past week. Revenues came in at CN¥2.1b, in line with expectations, while statutory losses per share were substantially higher than expected, at CN¥0.10 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Yonyou Network TechnologyLtd

Taking into account the latest results, the most recent consensus for Yonyou Network TechnologyLtd from 22 analysts is for revenues of CN¥10.8b in 2024. If met, it would imply a modest 5.7% increase on its revenue over the past 12 months. Statutory losses are forecast to balloon 80% to CN¥0.054 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥11.1b and earnings per share (EPS) of CN¥0.055 in 2024. There looks to have been a significant drop in sentiment regarding Yonyou Network TechnologyLtd's prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.

The consensus price target fell 9.7% to CN¥12.10, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Yonyou Network TechnologyLtd, with the most bullish analyst valuing it at CN¥23.50 and the most bearish at CN¥9.08 per share. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yonyou Network TechnologyLtd's past performance and to peers in the same industry. The analysts are definitely expecting Yonyou Network TechnologyLtd's growth to accelerate, with the forecast 12% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 18% annually. 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 biggest low-light for us was that the forecasts for Yonyou Network TechnologyLtd dropped from profits to a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Yonyou Network TechnologyLtd going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Yonyou Network TechnologyLtd's balance sheet, and whether we think Yonyou Network TechnologyLtd is carrying too much debt, for free on our platform here.

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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.