Analysts Just Made A Massive Upgrade To Their Koolearn Technology Holding Limited (HKG:1797) Forecasts

Celebrations may be in order for Koolearn Technology Holding Limited (HKG:1797) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 42% to HK$28.85 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the most recent consensus for Koolearn Technology Holding from its six analysts is for revenues of CN¥2.6b in 2023 which, if met, would be a huge 326% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of CN¥0.47 per share this year. Before this latest update, the analysts had been forecasting revenues of CN¥1.7b and earnings per share (EPS) of CN¥0.30 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Koolearn Technology Holding

It will come as no surprise to learn that the analysts have increased their price target for Koolearn Technology Holding 34% to CN¥13.15 on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Koolearn Technology Holding analyst has a price target of CN¥26.00 per share, while the most pessimistic values it at CN¥2.92. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Koolearn Technology Holding's rate of growth is expected to accelerate meaningfully, with the forecast 3x annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 14% 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 21% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Koolearn Technology Holding is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Koolearn Technology Holding could be worth investigating further.

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 Koolearn Technology Holding 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 upgrading 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.