Analysts Just Made A Major Revision To Their MicroPort CardioFlow Medtech Corporation (HKG:2160) Revenue Forecasts

Market forces rained on the parade of MicroPort CardioFlow Medtech Corporation (HKG:2160) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Bidders are definitely seeing a different story, with the stock price of HK$2.86 reflecting a 11% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the most recent consensus for MicroPort CardioFlow Medtech from its five analysts is for revenues of CN¥369m in 2022 which, if met, would be a huge 84% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 50% to CN¥0.038. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥501m and losses of CN¥0.038 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

See our latest analysis for MicroPort CardioFlow Medtech

Analysts lifted their price target 18% to CN¥10.64 per share, with reduced revenue estimates seemingly not expected to have a long-term impact on the intrinsic value of the business. 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 MicroPort CardioFlow Medtech analyst has a price target of CN¥21.83 per share, while the most pessimistic values it at CN¥6.48. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. The analysts are definitely expecting MicroPort CardioFlow Medtech's growth to accelerate, with the forecast 84% annualised growth to the end of 2022 ranking favourably alongside historical growth of 68% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 38% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that MicroPort CardioFlow Medtech is expected to grow much faster than its industry.

The Bottom Line

Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on MicroPort CardioFlow Medtech after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for MicroPort CardioFlow Medtech going out to 2024, 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.