Need To Know: Analysts Are Much More Bullish On Shanghai Henlius Biotech, Inc. (HKG:2696) Revenues

Shanghai Henlius Biotech, Inc. (HKG:2696) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investor sentiment seems to be improving too, with the share price up 8.6% to HK$12.38 over the past 7 days. Could this big upgrade push the stock even higher?

Following the upgrade, the current consensus from Shanghai Henlius Biotech's four analysts is for revenues of CN¥4.3b in 2023 which - if met - would reflect a huge 83% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CN¥3.8b of revenue in 2023. The consensus has definitely become more optimistic, showing a decent improvement in revenue forecasts.

See our latest analysis for Shanghai Henlius Biotech

Notably, the analysts have cut their price target 5.9% to CN¥34.59, suggesting concerns around Shanghai Henlius Biotech's valuation. 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. Currently, the most bullish analyst values Shanghai Henlius Biotech at CN¥79.69 per share, while the most bearish prices it at CN¥5.50. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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 can infer from the latest estimates that forecasts expect a continuation of Shanghai Henlius Biotech'shistorical trends, as the 83% annualised revenue growth to the end of 2023 is roughly in line with the 95% annual revenue growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 35% annually. So it's pretty clear that Shanghai Henlius Biotech is forecast to grow substantially faster than its industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Shanghai Henlius Biotech this year. The analysts also expect revenues to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Shanghai Henlius Biotech's future valuation. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Shanghai Henlius Biotech.

It's great to see the analysts upgrading their estimates, but the biggest highlight to us is that the business is expected to become profitable in the foreseeable future. For more information, you can click through to our free platform to learn more about these forecasts.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading 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.