Some Shanghai Junshi Biosciences Co., Ltd. (HKG:1877) Analysts Just Made A Major Cut To Next Year's Estimates

The analysts covering Shanghai Junshi Biosciences Co., Ltd. (HKG:1877) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the seven analysts covering Shanghai Junshi Biosciences, is for revenues of CN¥2.0b in 2022, which would reflect a disturbing 22% reduction in Shanghai Junshi Biosciences' sales over the past 12 months. Losses are forecast to hold steady at around CN¥2.12. However, before this estimates update, the consensus had been expecting revenues of CN¥2.3b and CN¥1.81 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

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The consensus price target fell 6.0% to CN¥47.53, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values Shanghai Junshi Biosciences at CN¥84.00 per share, while the most bearish prices it at CN¥36.50. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Junshi Biosciences' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 22% by the end of 2022. This indicates a significant reduction from annual growth of 60% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 42% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shanghai Junshi Biosciences is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Shanghai Junshi Biosciences' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Shanghai Junshi Biosciences going out to 2024, 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 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.