RemeGen Co., Ltd. (HKG:9995) Just Reported Earnings, And Analysts Cut Their Target Price

RemeGen Co., Ltd. (HKG:9995) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 4.6%to hit CN¥740m. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for RemeGen

Taking into account the latest results, the current consensus from RemeGen's 16 analysts is for revenues of CN¥1.68b in 2024. This would reflect a decent 20% increase on its revenue over the past 12 months. Losses are forecast to narrow 8.0% to CN¥2.72 per share. Before this latest report, the consensus had been expecting revenues of CN¥1.64b and CN¥2.36 per share in losses. So it's pretty clear the analysts have mixed opinions on RemeGen even after this update; although they upped their revenue numbers, it came at the cost of a noticeable increase in per-share losses.

Spiting the revenue upgrading, the average price target fell 30% to HK$26.81, clearly signalling that higher forecast losses are a valuation concern. 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 RemeGen at HK$49.53 per share, while the most bearish prices it at HK$15.16. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 RemeGen's growth to accelerate, with the forecast 44% annualised growth to the end of 2024 ranking favourably alongside historical growth of 16% 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 24% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect RemeGen to grow faster than 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on RemeGen. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for RemeGen going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for RemeGen that you should be aware 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.