Stock Analysis

One Analyst Thinks Vincent Medical Holdings Limited's (HKG:1612) Revenues Are Under Threat

SEHK:1612
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The latest analyst coverage could presage a bad day for Vincent Medical Holdings Limited (HKG:1612), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

After the downgrade, the consensus from Vincent Medical Holdings' solo analyst is for revenues of HK$566m in 2022, which would reflect a stressful 27% decline in sales compared to the last year of performance. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analyst forecasting losses of HK$0.018 per share in 2022. Prior to this update, the analyst had been forecasting revenues of HK$694m and earnings per share (EPS) of HK$0.087 in 2022. So we can see that the consensus has become notably more bearish on Vincent Medical Holdings' outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Vincent Medical Holdings

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SEHK:1612 Earnings and Revenue Growth August 7th 2022

The consensus price target fell 52% to HK$0.62, implicitly signalling that lower earnings per share are a leading indicator for Vincent Medical Holdings' valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 20% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 39% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Vincent Medical Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst is expecting Vincent Medical Holdings to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Vincent Medical Holdings.

As you can see, this broker clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with Vincent Medical Holdings' financials, such as its declining profit margins. For more information, you can click here to discover this and the 3 other warning signs we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading 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.