The Consensus EPS Estimates For Yonghe Medical Group Co., Ltd. (HKG:2279) Just Fell Dramatically

The latest analyst coverage could presage a bad day for Yonghe Medical Group Co., Ltd. (HKG:2279), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Yonghe Medical Group's six analysts is for revenues of CN¥2.2b in 2022, which would reflect a meaningful 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 68% to CN¥0.30. Previously, the analysts had been modelling revenues of CN¥2.6b and earnings per share (EPS) of CN¥0.37 in 2022. Indeed, we can see that the analysts are a lot more bearish about Yonghe Medical Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Yonghe Medical Group

The consensus price target fell 18% to HK$12.17, with the weaker earnings outlook clearly leading analyst valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Yonghe Medical Group analyst has a price target of HK$18.40 per share, while the most pessimistic values it at HK$11.80. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Yonghe Medical Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 16% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 11% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 19% per year. So while Yonghe Medical Group's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Yonghe Medical Group. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Yonghe Medical Group.

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 Yonghe Medical Group 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.

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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.