BYD Company Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in BYD Company Limited (HKG:1211) had a good week, as its shares rose 7.2% to close at HK$216 following the release of its quarterly results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at CN¥125b, statutory earnings beat expectations by a notable 14%, coming in at CN¥1.57 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for BYD

Following the latest results, BYD's 25 analysts are now forecasting revenues of CN¥729.4b in 2024. This would be a major 20% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 12% to CN¥11.71. In the lead-up to this report, the analysts had been modelling revenues of CN¥748.3b and earnings per share (EPS) of CN¥11.85 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was steady at HK$289even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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 BYD at HK$457 per share, while the most bearish prices it at HK$160. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. We would highlight that BYD's revenue growth is expected to slow, with the forecast 28% annualised growth rate until the end of 2024 being well below the historical 37% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% per year. Even after the forecast slowdown in growth, it seems obvious that BYD is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at HK$289, 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. At Simply Wall St, we have a full range of analyst estimates for BYD going out to 2026, and you can see them free on our platform here..

We also provide an overview of the BYD Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.