Sangfor Technologies Inc. (SZSE:300454) Just Reported, And Analysts Assigned A CN¥59.89 Price Target

Sangfor Technologies Inc. (SZSE:300454) shareholders are probably feeling a little disappointed, since its shares fell 3.1% to CN¥45.67 in the week after its latest quarterly results. Revenues of CN¥1.7b came in a modest 8.0% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of CN¥0.25 coming in a substantial 24% smaller than what the analysts had expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sangfor Technologies after the latest results.

See our latest analysis for Sangfor Technologies

Taking into account the latest results, the consensus forecast from Sangfor Technologies' 16 analysts is for revenues of CN¥8.25b in 2024. This reflects a notable 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 84% to CN¥0.70. Before this earnings report, the analysts had been forecasting revenues of CN¥8.20b and earnings per share (EPS) of CN¥0.72 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target fell 6.4% to CN¥59.89, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Sangfor Technologies at CN¥79.00 per share, while the most bearish prices it at CN¥41.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Sangfor Technologies' growth to accelerate, with the forecast 23% annualised growth to the end of 2024 ranking favourably alongside historical growth of 13% 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. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sangfor Technologies to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sangfor Technologies. 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. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Sangfor Technologies. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Sangfor Technologies going out to 2026, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Sangfor Technologies that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.