Analysts Just Shaved Their Longfor Group Holdings Limited (HKG:960) Forecasts Dramatically

Market forces rained on the parade of Longfor Group Holdings Limited (HKG:960) shareholders today, when the analysts downgraded their forecasts for this year. 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.

After the downgrade, the consensus from Longfor Group Holdings' 23 analysts is for revenues of CN¥112b in 2025, which would reflect a definite 12% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to crater 44% to CN¥0.85 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥132b and earnings per share (EPS) of CN¥1.42 in 2025. Indeed, we can see that the analysts are a lot more bearish about Longfor Group Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Longfor Group Holdings

Despite the cuts to forecast earnings, there was no real change to the CN¥10.93 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Longfor Group Holdings at CN¥14.03 per share, while the most bearish prices it at CN¥8.87. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Longfor Group Holdings' past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Longfor Group Holdings' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 12% to the end of 2025. This tops off a historical decline of 0.2% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 4.6% annually. So while a broad number of companies are forecast to grow, unfortunately Longfor Group Holdings is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Longfor Group Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Longfor Group Holdings.

Still, 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 Longfor Group Holdings going out to 2027, and you can see them free on our platform here.

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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.