Linklogis Inc. (HKG:9959) Just Reported Earnings, And Analysts Cut Their Target Price

Linklogis Inc. (HKG:9959) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. Revenues missed expectations somewhat, coming in at CN¥1.2b, but statutory earnings fell catastrophically short, with a loss of CN¥7.79 some 158% larger than what the analysts had predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Linklogis

Taking into account the latest results, the most recent consensus for Linklogis from four analysts is for revenues of CN¥1.59b in 2022 which, if met, would be a substantial 33% increase on its sales over the past 12 months. Earnings are expected to improve, with Linklogis forecast to report a statutory profit of CN¥0.13 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.62b and earnings per share (EPS) of CN¥0.17 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

It might be a surprise to learn that the consensus price target fell 6.3% to HK$12.93, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Linklogis analyst has a price target of HK$15.90 per share, while the most pessimistic values it at HK$12.33. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. We can infer from the latest estimates that forecasts expect a continuation of Linklogis'historical trends, as the 33% annualised revenue growth to the end of 2022 is roughly in line with the 28% annual revenue growth over the past three years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 27% per year. It's clear that while Linklogis' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Linklogis' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Linklogis analysts - going out to 2023, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Linklogis that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.