Analysts Are More Bearish On CStone Pharmaceuticals (HKG:2616) Than They Used To Be

One thing we could say about the analysts on CStone Pharmaceuticals (HKG:2616) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Shares are up 4.2% to HK$3.45 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the latest consensus from CStone Pharmaceuticals' two analysts is for revenues of CN¥516m in 2025, which would reflect a substantial 27% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching CN¥0.21 per share. However, before this estimates update, the consensus had been expecting revenues of CN¥632m and CN¥0.15 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.

Check out our latest analysis for CStone Pharmaceuticals

There was no major change to the consensus price target of CN¥4.43, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 CStone Pharmaceuticals analyst has a price target of CN¥6.28 per share, while the most pessimistic values it at CN¥2.59. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that CStone Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 2.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 24% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that CStone Pharmaceuticals is expected to grow at about the same rate as 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. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of CStone Pharmaceuticals.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for CStone Pharmaceuticals going out as far as 2027, and you can see them free on our platform here.

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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.