Analysts Have Been Trimming Their 361 Degrees International Limited (HKG:1361) Price Target After Its Latest Report

It's been a good week for 361 Degrees International Limited (HKG:1361) shareholders, because the company has just released its latest half-year results, and the shares gained 5.3% to HK$3.58. It was a credible result overall, with revenues of CN¥5.1b and statutory earnings per share of CN¥0.47 both in line with analyst estimates, showing that 361 Degrees International is executing in line with expectations. 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.

Check out our latest analysis for 361 Degrees International

Taking into account the latest results, the consensus forecast from 361 Degrees International's 13 analysts is for revenues of CN¥9.91b in 2024. This reflects a modest 7.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 4.8% to CN¥0.53. In the lead-up to this report, the analysts had been modelling revenues of CN¥9.92b and earnings per share (EPS) of CN¥0.55 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The average price target fell 10% to HK$5.07, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. There are some variant perceptions on 361 Degrees International, with the most bullish analyst valuing it at HK$5.92 and the most bearish at HK$4.07 per share. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the 361 Degrees International's past performance and to peers in the same industry. It's clear from the latest estimates that 361 Degrees International's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. 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 9.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that 361 Degrees International 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 361 Degrees International. 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. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for 361 Degrees International going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - 361 Degrees International has 1 warning sign we think 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.