Time To Worry? Analysts Are Downgrading Their New World Development Company Limited (HKG:17) Outlook

The latest analyst coverage could presage a bad day for New World Development Company Limited (HKG:17), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

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Following the downgrade, the most recent consensus for New World Development from its eight analysts is for revenues of HK$30b in 2026 which, if met, would be a solid 9.0% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 87% to HK$0.86. Yet prior to the latest estimates, the analysts had been forecasting revenues of HK$36b and losses of HK$0.36 per share in 2026. 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 expecting losses per share to increase.

Check out our latest analysis for New World Development

Analysts lifted their price target 10% to HK$5.26, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value.

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. For example, we noticed that New World Development's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 9.0% growth to the end of 2026 on an annualised basis. That is well above its historical decline of 12% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.1% annually. So it looks like New World Development is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of New World Development.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple New World Development analysts - going out to 2028, 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 with high insider ownership.

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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.