Growth Investors: Industry Analysts Just Upgraded Their Akeso, Inc. (HKG:9926) Revenue Forecasts By 18%

Akeso, Inc. (HKG:9926) 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 9.7% to HK$44.50 over the past 7 days. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

After the upgrade, the 17 analysts covering Akeso are now predicting revenues of CN¥5.2b in 2023. If met, this would reflect a sizeable improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of CN¥2.00 per share this year. Prior to this update, the analysts had been forecasting revenues of CN¥4.4b and earnings per share (EPS) of CN¥1.85 in 2023. The forecasts seem more optimistic now, with a decent improvement in revenue and a modest lift to earnings per share estimates.

See our latest analysis for Akeso

It will come as no surprise to learn that the analysts have increased their price target for Akeso 5.6% to CN¥49.06 on the back of these upgrades. 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 Akeso at CN¥64.13 per share, while the most bearish prices it at CN¥32.00. 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. The analysts are definitely expecting Akeso's growth to accelerate, with the forecast 5x annualised growth to the end of 2023 ranking favourably alongside historical growth of 93% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 34% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Akeso to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Akeso.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Akeso 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.