Growth Investors: Industry Analysts Just Upgraded Their New Horizon Health Limited (HKG:6606) Revenue Forecasts By 26%

Celebrations may be in order for New Horizon Health Limited (HKG:6606) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that New Horizon Health will make substantially more sales than they'd previously expected. New Horizon Health has also found favour with investors, with the stock up a noteworthy 24% to HK$30.30 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the latest consensus from New Horizon Health's four analysts is for revenues of CN¥711m in 2022, which would reflect a sizeable 80% improvement in sales compared to the last 12 months. Per-share losses are expected to see a sharp uptick, reaching CN¥0.70. Yet before this consensus update, the analysts had been forecasting revenues of CN¥566m and losses of CN¥0.76 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

View our latest analysis for New Horizon Health

Despite these upgrades, the analysts have not made any major changes to their price target of CN¥49.96, implying that their latest estimates don't have a long term impact on what they think the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values New Horizon Health at CN¥65.97 per share, while the most bearish prices it at CN¥50.78. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of New Horizon Health'shistorical trends, as the 225% annualised revenue growth to the end of 2022 is roughly in line with the 279% annual revenue growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 15% per year. So although New Horizon Health is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around New Horizon Health's prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at New Horizon Health.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple New Horizon Health analysts - going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.