Analysts Have Just Cut Their Venus Medtech (Hangzhou) Inc. (HKG:2500) Revenue Estimates By 28%

The latest analyst coverage could presage a bad day for Venus Medtech (Hangzhou) Inc. (HKG:2500), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At HK$65.05, shares are up 7.1% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After the downgrade, the six analysts covering Venus Medtech (Hangzhou) are now predicting revenues of CN¥642m in 2021. If met, this would reflect a huge 133% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CN¥893m in 2021. It looks like forecasts have become a fair bit less optimistic on Venus Medtech (Hangzhou), given the pretty serious reduction to revenue estimates.

View our latest analysis for Venus Medtech (Hangzhou)

We'd point out that there was no major changes to their price target of CN¥74.07, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. Currently, the most bullish analyst values Venus Medtech (Hangzhou) at CN¥99.82 per share, while the most bearish prices it at CN¥70.63. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Venus Medtech (Hangzhou) shareholders.

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. It's clear from the latest estimates that Venus Medtech (Hangzhou)'s rate of growth is expected to accelerate meaningfully, with the forecast 133% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 47% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 26% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Venus Medtech (Hangzhou) to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Venus Medtech (Hangzhou) this year. They're also forecasting more rapid revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Venus Medtech (Hangzhou) after today.

But wait - there's more! At least one of Venus Medtech (Hangzhou)'s six analysts has provided estimates out to 2025, which can be seen for 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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