Revenue Downgrade: Here's What Analysts Forecast For Onewo Inc. (HKG:2602)

Today is shaping up negative for Onewo Inc. (HKG:2602) 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. The stock price has risen 8.4% to HK$19.54 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, Onewo's 14 analysts are now forecasting revenues of CN¥37b in 2024. This would be a meaningful 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 14% to CN¥1.89. Previously, the analysts had been modelling revenues of CN¥41b and earnings per share (EPS) of CN¥2.05 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.

Check out our latest analysis for Onewo

The consensus price target fell 9.5% to CN¥29.92, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. There are some variant perceptions on Onewo, with the most bullish analyst valuing it at CN¥40.35 and the most bearish at CN¥23.11 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Onewo's past performance and to peers in the same industry. We would highlight that Onewo's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 18% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.1% per year. Even after the forecast slowdown in growth, it seems obvious that Onewo is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Onewo after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Onewo analysts - 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.