Earnings Update: InnoCare Pharma Limited (HKG:9969) Just Reported Its Interim Results And Analysts Are Updating Their Forecasts

Investors in InnoCare Pharma Limited (HKG:9969) had a good week, as its shares rose 8.4% to close at HK$15.17 following the release of its half-yearly results. It looks like the results were pretty good overall. While revenues of CN¥731m were in line with analyst predictions, statutory losses were much smaller than expected, with InnoCare Pharma losing CN¥0.02 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on InnoCare Pharma after the latest results.

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Taking into account the latest results, the current consensus from InnoCare Pharma's ten analysts is for revenues of CN¥1.56b in 2025. This would reflect a meaningful 9.6% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 28% to CN¥0.097. Before this earnings announcement, the analysts had been modelling revenues of CN¥1.53b and losses of CN¥0.12 per share in 2025. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a notable improvement in loss per share in particular.

View our latest analysis for InnoCare Pharma

There was no major change to the consensus price target of HK$18.18, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. 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 InnoCare Pharma at HK$26.77 per share, while the most bearish prices it at HK$11.93. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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 InnoCare Pharma's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 20% growth on an annualised basis. This is compared to a historical growth rate of 26% 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 26% per year. Factoring in the forecast slowdown in growth, it seems obvious that InnoCare Pharma is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at HK$18.18, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for InnoCare Pharma going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for InnoCare Pharma that you need to be mindful of.

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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.