Downgrade: Here's How Analysts See Agile Group Holdings Limited (HKG:3383) Performing In The Near Term

Market forces rained on the parade of Agile Group Holdings Limited (HKG:3383) 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. At HK$4.24, shares are up 6.8% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the current consensus from Agile Group Holdings' 15 analysts is for revenues of CN¥93b in 2022 which - if met - would reflect a major 27% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to fall 15% to CN¥1.45 in the same period. Previously, the analysts had been modelling revenues of CN¥95b and earnings per share (EPS) of CN¥1.89 in 2022. The forecasts seem less optimistic after the new consensus numbers, with lower sales estimates and making a pretty serious decline to earnings per share forecasts.

View our latest analysis for Agile Group Holdings

It'll come as no surprise then, to learn that the analysts have cut their price target 5.4% to CN¥4.56. 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 Agile Group Holdings at CN¥15.83 per share, while the most bearish prices it at CN¥2.79. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Agile Group Holdings' past performance and to peers in the same industry. The analysts are definitely expecting Agile Group Holdings' growth to accelerate, with the forecast 27% annualised growth to the end of 2022 ranking favourably alongside historical growth of 12% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Agile Group Holdings is expected to grow much faster than its 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Agile Group Holdings analysts - going out to 2024, 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.