What You Need To Know About The China Reinsurance (Group) Corporation (HKG:1508) Analyst Downgrade Today

Market forces rained on the parade of China Reinsurance (Group) Corporation (HKG:1508) 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. Investors however, have been notably more optimistic about China Reinsurance (Group) recently, with the stock price up a worthy 17% to HK$0.62 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the latest consensus from China Reinsurance (Group)'s three analysts is for revenues of CN¥124b in 2024, which would reflect a sizeable 31% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CN¥156b of revenue in 2024. It looks like forecasts have become a fair bit less optimistic on China Reinsurance (Group), given the sizeable cut to revenue estimates.

View our latest analysis for China Reinsurance (Group)

We'd point out that there was no major changes to their price target of CN¥0.62, suggesting the latest estimates were not enough to shift their view on the value of the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on China Reinsurance (Group), with the most bullish analyst valuing it at CN¥0.78 and the most bearish at CN¥0.48 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that China Reinsurance (Group) is forecast to grow faster in the future than it has in the past, with revenues expected to display 31% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.2% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.3% annually. Not only are China Reinsurance (Group)'s revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for China Reinsurance (Group) this year. Analysts also expect revenues to grow faster than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on China Reinsurance (Group) after today.

Unanswered questions? We have estimates for China Reinsurance (Group) from its three analysts out until 2026, 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 with high insider ownership.

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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.

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