Analysts Are Betting On China Molybdenum Co., Ltd. (HKG:3993) With A Big Upgrade This Week

China Molybdenum Co., Ltd. (HKG:3993) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that China Molybdenum will make substantially more sales than they'd previously expected. The market may be pricing in some blue sky too, with the share price gaining 32% to HK$4.04 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the latest consensus from China Molybdenum's 16 analysts is for revenues of CN¥188b in 2022, which would reflect a credible 7.9% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 27% to CN¥0.30. Before this latest update, the analysts had been forecasting revenues of CN¥164b and earnings per share (EPS) of CN¥0.28 in 2022. The most recent forecasts are noticeably more optimistic, with a nice increase in revenue estimates and a lift to earnings per share as well.

View our latest analysis for China Molybdenum

Despite these upgrades, the analysts have not made any major changes to their price target of CN¥5.36, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 China Molybdenum analyst has a price target of CN¥8.02 per share, while the most pessimistic values it at CN¥4.03. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that China Molybdenum's revenue growth is expected to slow, with the forecast 7.9% annualised growth rate until the end of 2022 being well below the historical 51% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.7% annually. Even after the forecast slowdown in growth, it seems obvious that China Molybdenum is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at China Molybdenum.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple China Molybdenum analysts - going out to 2024, 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.

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.