Innovent Biologics, Inc. (HKG:1801) Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?

Last week saw the newest yearly earnings release from Innovent Biologics, Inc. (HKG:1801), an important milestone in the company's journey to build a stronger business. The results were positive, with revenue coming in at CN¥6.2b, beating analyst expectations by 4.0%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Innovent Biologics

Taking into account the latest results, the consensus forecast from Innovent Biologics' 26 analysts is for revenues of CN¥7.56b in 2024. This reflects a sizeable 22% improvement in revenue compared to the last 12 months. Losses are supposed to decline, shrinking 18% from last year to CN¥0.52. Before this earnings announcement, the analysts had been modelling revenues of CN¥7.52b and losses of CN¥0.56 per share in 2024. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

The average price target held steady at HK$55.28, seeming to indicate that business is performing in line with expectations. 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. Currently, the most bullish analyst values Innovent Biologics at HK$76.75 per share, while the most bearish prices it at HK$36.79. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Innovent Biologics' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Innovent Biologics' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 22% growth on an annualised basis. This is compared to a historical growth rate of 36% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 26% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Innovent Biologics.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Innovent Biologics going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Innovent Biologics that you need to take into consideration.

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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.