Bullish: This Analyst Just Lifted Their Lai Sun Development Company Limited (HKG:488) Outlook For This Year

Shareholders in Lai Sun Development Company Limited (HKG:488) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

Following the upgrade, the consensus from solo analyst covering Lai Sun Development is for revenues of HK$4.5b in 2023, implying a discernible 6.7% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 61% to HK$0.77. Yet before this consensus update, the analyst had been forecasting revenues of HK$4.1b and losses of HK$0.92 per share in 2023. We can see there's definitely been a change in sentiment in this update, with the analyst administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

See our latest analysis for Lai Sun Development

Yet despite these upgrades, the analyst cut their price target 49% to HK$2.31, implicitly signalling that the ongoing losses are likely to weigh negatively on Lai Sun Development's valuation.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 6.7% by the end of 2023. This indicates a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.4% annually for the foreseeable future. It's pretty clear that Lai Sun Development's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analyst reduced their loss per share estimates for this year, reflecting increased optimism around Lai Sun Development's prospects. Pleasantly, the analyst also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at Lai Sun Development.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential warning sign with Lai Sun Development, including dilutive stock issuance over the past year. You can learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.