Analysts Just Published A Bright New Outlook For 3SBio Inc.'s (HKG:1530)

3SBio Inc. (HKG:1530) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on 3SBio too, with the stock up 30% to HK$18.86 over the past week. Could this upgrade be enough to drive the stock even higher?

We've discovered 2 warning signs about 3SBio. View them for free.

Following the upgrade, the most recent consensus for 3SBio from its twelve analysts is for revenues of CN¥14b in 2025 which, if met, would be a substantial 52% increase on its sales over the past 12 months. Per-share earnings are expected to leap 121% to CN¥1.96. Prior to this update, the analysts had been forecasting revenues of CN¥10b and earnings per share (EPS) of CN¥0.98 in 2025. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for 3SBio

With these upgrades, we're not surprised to see that the analysts have lifted their price target 54% to CN¥17.53 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic 3SBio analyst has a price target of CN¥26.12 per share, while the most pessimistic values it at CN¥8.49. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that 3SBio's rate of growth is expected to accelerate meaningfully, with the forecast 52% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 11% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 25% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that 3SBio is expected to grow much faster than its 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, 3SBio could be worth investigating further.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential warning sign with 3SBio, including recent substantial insider selling. For more information, you can click through to our platform to learn more about this and the 1 other warning sign we've identified .

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 backed by insiders.

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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.