Earnings Beat: Zhongji Innolight Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Zhongji Innolight Co., Ltd. (SZSE:300308) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. The company beat forecasts, with revenue of CN¥6.0b, some 2.7% above estimates, and statutory earnings per share (EPS) coming in at CN¥1.23, 21% ahead of expectations. 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.

View our latest analysis for Zhongji Innolight

Following the latest results, Zhongji Innolight's 22 analysts are now forecasting revenues of CN¥25.7b in 2024. This would be a substantial 47% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 37% to CN¥4.87. Before this earnings report, the analysts had been forecasting revenues of CN¥26.0b and earnings per share (EPS) of CN¥4.69 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at CN¥173, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Zhongji Innolight analyst has a price target of CN¥220 per share, while the most pessimistic values it at CN¥89.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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 Zhongji Innolight's growth to accelerate, with the forecast 115% annualised growth to the end of 2024 ranking favourably alongside historical growth of 22% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Zhongji Innolight is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Zhongji Innolight's earnings potential next year. 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. The consensus price target held steady at CN¥173, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Zhongji Innolight analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Zhongji Innolight (1 shouldn't be ignored) 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.