Analysts Have Made A Financial Statement On ZTE Corporation's (SZSE:000063) Full-Year Report

Last week saw the newest full-year earnings release from ZTE Corporation (SZSE:000063), an important milestone in the company's journey to build a stronger business. Revenues of CN¥124b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥1.96, missing estimates by 3.9%. 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.

See our latest analysis for ZTE

Taking into account the latest results, the current consensus from ZTE's 17 analysts is for revenues of CN¥130.8b in 2024. This would reflect an okay 5.2% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to ascend 13% to CN¥2.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥134.2b and earnings per share (EPS) of CN¥2.29 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.

The analysts made no major changes to their price target of CN¥34.35, suggesting the downgrades are not expected to have a long-term impact on ZTE's valuation. 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 ZTE, with the most bullish analyst valuing it at CN¥53.43 and the most bearish at CN¥16.51 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that ZTE's revenue growth is expected to slow, with the forecast 5.2% annualised growth rate until the end of 2024 being well below the historical 8.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 24% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than ZTE.

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. We have forecasts for ZTE 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 ZTE 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.