Some Analysts Just Cut Their Ascentage Pharma Group International (HKG:6855) Estimates

One thing we could say about the analysts on Ascentage Pharma Group International (HKG:6855) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the five analysts covering Ascentage Pharma Group International are now predicting revenues of CN¥390m in 2023. If met, this would reflect a substantial 52% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to CN¥2.89. However, before this estimates update, the consensus had been expecting revenues of CN¥440m and CN¥2.74 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Ascentage Pharma Group International

There was no major change to the consensus price target of CN¥28.93, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Ascentage Pharma Group International at CN¥33.50 per share, while the most bearish prices it at CN¥25.63. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Ascentage Pharma Group International is an easy business to forecast or the underlying assumptions are obvious.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ascentage Pharma Group International's past performance and to peers in the same industry. The analysts are definitely expecting Ascentage Pharma Group International's growth to accelerate, with the forecast 130% annualised growth to the end of 2023 ranking favourably alongside historical growth of 97% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 35% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Ascentage Pharma Group International to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Ascentage Pharma Group International. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Ascentage Pharma Group International after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Ascentage Pharma Group International analysts - going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.