iFLYTEK CO.,LTD (SZSE:002230) Just Reported And Analysts Have Been Cutting Their Estimates

As you might know, iFLYTEK CO.,LTD (SZSE:002230) last week released its latest quarterly, and things did not turn out so great for shareholders. It was a pretty negative result overall, with revenues of CN¥3.6b missing analyst predictions by 6.1%. Worse, the business reported a statutory loss of CN¥0.13 per share, much larger than the analysts had forecast prior to the result. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for iFLYTEKLTD

After the latest results, the 21 analysts covering iFLYTEKLTD are now predicting revenues of CN¥24.4b in 2024. If met, this would reflect a decent 20% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 116% to CN¥0.39. Before this earnings report, the analysts had been forecasting revenues of CN¥26.1b and earnings per share (EPS) of CN¥0.66 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

The consensus price target fell 6.5% to CN¥56.86, with the weaker earnings outlook clearly leading valuation estimates. 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. There are some variant perceptions on iFLYTEKLTD, with the most bullish analyst valuing it at CN¥82.00 and the most bearish at CN¥38.90 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. The analysts are definitely expecting iFLYTEKLTD's growth to accelerate, with the forecast 27% annualised growth to the end of 2024 ranking favourably alongside historical growth of 18% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that iFLYTEKLTD 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. They also downgraded iFLYTEKLTD's revenue estimates, but industry data suggests that it is expected to 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 iFLYTEKLTD'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 forecasts for iFLYTEKLTD going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for iFLYTEKLTD you should be aware of.

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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.