News Flash: Analysts Just Made A Captivating Upgrade To Their MGM China Holdings Limited (HKG:2282) Forecasts

Shareholders in MGM China Holdings Limited (HKG:2282) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Investor sentiment seems to be improving too, with the share price up 5.3% to HK$4.80 over the past 7 days. Could this big upgrade push the stock even higher?

Following the upgrade, the current consensus from MGM China Holdings' 16 analysts is for revenues of HK$12b in 2022 which - if met - would reflect a major 23% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 40% to HK$0.61. However, before this estimates update, the consensus had been expecting revenues of HK$10b and HK$0.73 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

See our latest analysis for MGM China Holdings

Despite these upgrades, the analysts have not made any major changes to their price target of HK$6.84, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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. Currently, the most bullish analyst values MGM China Holdings at HK$10.30 per share, while the most bearish prices it at HK$5.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MGM China Holdings' past performance and to peers in the same industry. For example, we noticed that MGM China Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 23% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 11% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 25% per year. So it looks like MGM China Holdings is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around MGM China Holdings' prospects. They also upgraded their revenue forecasts, although the latest estimates suggest that MGM China Holdings will grow in line with the overall market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at MGM China Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple MGM China Holdings analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.