Here's What Analysts Are Forecasting For L.K. Technology Holdings Limited (HKG:558) Following Its Earnings Miss

It's shaping up to be a tough period for L.K. Technology Holdings Limited (HKG:558), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. L.K. Technology Holdings missed analyst forecasts, with revenues of HK$5.4b and statutory earnings per share (EPS) of HK$0.46, falling short by 6.7% and 6.4% respectively. 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 L.K. Technology Holdings

After the latest results, the three analysts covering L.K. Technology Holdings are now predicting revenues of HK$6.84b in 2023. If met, this would reflect a sizeable 28% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 31% to HK$0.59. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$6.86b and earnings per share (EPS) of HK$0.61 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The average price target fell 5.2% to HK$21.90, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. Currently, the most bullish analyst values L.K. Technology Holdings at HK$27.00 per share, while the most bearish prices it at HK$19.60. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting L.K. Technology Holdings' growth to accelerate, with the forecast 28% annualised growth to the end of 2023 ranking favourably alongside historical growth of 7.0% 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 10% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that L.K. Technology Holdings is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for L.K. Technology Holdings. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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.

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. At Simply Wall St, we have a full range of analyst estimates for L.K. Technology Holdings going out to 2025, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for L.K. Technology Holdings you should know about.

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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.