Shanghai Henlius Biotech, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

A week ago, Shanghai Henlius Biotech, Inc. (HKG:2696) came out with a strong set of full-year numbers that could potentially lead to a re-rate of the stock. Shanghai Henlius Biotech beat earnings, with revenues hitting CN¥5.4b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 16%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shanghai Henlius Biotech after the latest results.

Check out our latest analysis for Shanghai Henlius Biotech

Following the latest results, Shanghai Henlius Biotech's six analysts are now forecasting revenues of CN¥6.01b in 2024. This would be a decent 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 8.7% to CN¥1.09. Before this earnings report, the analysts had been forecasting revenues of CN¥5.84b and earnings per share (EPS) of CN¥1.05 in 2024. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 17% to HK$18.07per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Shanghai Henlius Biotech, with the most bullish analyst valuing it at HK$25.20 and the most bearish at HK$9.06 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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 pretty clear that there is an expectation that Shanghai Henlius Biotech's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 64% 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 25% 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 Shanghai Henlius Biotech.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Shanghai Henlius Biotech's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Shanghai Henlius Biotech. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shanghai Henlius Biotech analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Shanghai Henlius Biotech that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.