Zhejiang Leapmotor Technology Co., Ltd. (HKG:9863) Analysts Just Slashed This Year's Revenue Estimates By 16%

Today is shaping up negative for Zhejiang Leapmotor Technology Co., Ltd. (HKG:9863) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Surprisingly the share price has been buoyant, rising 13% to HK$38.20 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the current consensus from Zhejiang Leapmotor Technology's six analysts is for revenues of CN¥24b in 2023 which - if met - would reflect a substantial 83% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 14% per share from last year to CN¥3.73. Yet before this consensus update, the analysts had been forecasting revenues of CN¥29b and losses of CN¥3.74 per share in 2023. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.

View our latest analysis for Zhejiang Leapmotor Technology

There was no real change to the consensus price target of CN¥41.24, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Zhejiang Leapmotor Technology's valuation. 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 Zhejiang Leapmotor Technology analyst has a price target of CN¥56.50 per share, while the most pessimistic values it at CN¥31.23. This is a fairly broad spread of estimates, suggesting that the 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 period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 83% growth on an annualised basis. That is in line with its 79% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 18% annually. So it's pretty clear that Zhejiang Leapmotor Technology is forecast to grow substantially faster than its industry.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Zhejiang Leapmotor Technology after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Zhejiang Leapmotor Technology analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.