Growth Investors: Industry Analysts Just Upgraded Their China Resources Medical Holdings Company Limited (HKG:1515) Revenue Forecasts By 45%

Celebrations may be in order for China Resources Medical Holdings Company Limited (HKG:1515) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The market seems to be pricing in some improvement in the business too, with the stock up 8.8% over the past week, closing at HK$4.69. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After the upgrade, the six analysts covering China Resources Medical Holdings are now predicting revenues of CN¥5.4b in 2022. If met, this would reflect a sizeable 22% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 9.1% to CN¥0.35. Before this latest update, the analysts had been forecasting revenues of CN¥3.8b and earnings per share (EPS) of CN¥0.35 in 2022. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

View our latest analysis for China Resources Medical Holdings

Even though revenue forecasts increased, there was no change to the consensus price target of CN¥5.81, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on China Resources Medical Holdings, with the most bullish analyst valuing it at CN¥12.11 and the most bearish at CN¥3.70 per share. 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.

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 period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 22% growth on an annualised basis. That is in line with its 19% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 17% annually. So although China Resources Medical Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at China Resources Medical Holdings.

Better yet, our automated discounted cash flow calculation (DCF) suggests China Resources Medical Holdings could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

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.