RemeGen Co., Ltd. (HKG:9995) Just Reported And Analysts Have Been Cutting Their Estimates

Investors in RemeGen Co., Ltd. (HKG:9995) had a good week, as its shares rose 4.0% to close at HK$56.50 following the release of its full-year results. It was a pretty good result, with revenues of CN¥1.4b, and RemeGen came in a solid 20% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for RemeGen

Following the recent earnings report, the consensus from ten analysts covering RemeGen is for revenues of CN¥1.36b in 2022, implying a noticeable 4.6% decline in sales compared to the last 12 months. The company is forecast to report a statutory loss of CN¥0.72 in 2022, a sharp decline from a profit over the last year. Before this latest report, the consensus had been expecting revenues of CN¥1.45b and CN¥0.41 per share in losses. While this year's revenue estimates dropped there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target fell 5.3% to HK$120, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. The most optimistic RemeGen analyst has a price target of HK$154 per share, while the most pessimistic values it at HK$66.83. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.6% by the end of 2022. This indicates a significant reduction from annual growth of 149% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 36% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - RemeGen is expected to lag the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at RemeGen. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of RemeGen's future valuation.

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. At Simply Wall St, we have a full range of analyst estimates for RemeGen going out to 2024, 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 RemeGen 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.