Some Analysts Just Cut Their InnoCare Pharma Limited (HKG:9969) Estimates

Today is shaping up negative for InnoCare Pharma Limited (HKG:9969) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the most recent consensus for InnoCare Pharma from its eight analysts is for revenues of CN¥816m in 2024 which, if met, would be a meaningful 10% increase on its sales over the past 12 months. Per-share losses are expected to see a sharp uptick, reaching CN¥0.42. However, before this estimates update, the consensus had been expecting revenues of CN¥968m and CN¥0.42 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 making no real change to the loss per share numbers.

Check out our latest analysis for InnoCare Pharma

the analysts have cut their price target 6.4% to CN¥8.90 per share, signalling that the declining revenue and ongoing losses are contributing to the lower 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 InnoCare Pharma at CN¥13.73 per share, while the most bearish prices it at CN¥5.79. 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.

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 would highlight that InnoCare Pharma's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 54% p.a. growth over the last 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

Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower 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 InnoCare Pharma's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on InnoCare Pharma after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for InnoCare Pharma going out to 2026, and you can see them free on our platform here.

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