Analysts Have Lowered Expectations For Shandong Weigao Group Medical Polymer Company Limited (HKG:1066) After Its Latest Results

Shandong Weigao Group Medical Polymer Company Limited (HKG:1066) shareholders are probably feeling a little disappointed, since its shares fell 7.6% to HK$4.88 in the week after its latest yearly results. Results were roughly in line with estimates, with revenues of CN¥13b and statutory earnings per share of CN¥0.44. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Shandong Weigao Group Medical Polymer

Taking into account the latest results, the consensus forecast from Shandong Weigao Group Medical Polymer's nine analysts is for revenues of CN¥14.1b in 2024. This reflects a credible 6.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 11% to CN¥0.49. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥15.3b and earnings per share (EPS) of CN¥0.58 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The consensus price target fell 15% to HK$9.45, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Shandong Weigao Group Medical Polymer at HK$17.08 per share, while the most bearish prices it at HK$6.59. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Shandong Weigao Group Medical Polymer's revenue growth is expected to slow, with the forecast 6.7% annualised growth rate until the end of 2024 being well below the historical 8.6% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 23% per year. Factoring in the forecast slowdown in growth, it seems obvious that Shandong Weigao Group Medical Polymer is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shandong Weigao Group Medical Polymer. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Shandong Weigao Group Medical Polymer's future valuation.

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 Shandong Weigao Group Medical Polymer going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Shandong Weigao Group Medical Polymer that 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.