BOE Varitronix Limited Just Missed Earnings - But Analysts Have Updated Their Models

BOE Varitronix Limited (HKG:710) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. BOE Varitronix missed earnings this time around, with HK$11b revenue coming in 10.0% below what the analysts had modelled. Statutory earnings per share (EPS) of HK$0.60 also fell short of expectations by 14%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for BOE Varitronix

Taking into account the latest results, the consensus forecast from BOE Varitronix's eight analysts is for revenues of HK$12.8b in 2024. This reflects a solid 19% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 16% to HK$0.70. Before this earnings report, the analysts had been forecasting revenues of HK$14.6b and earnings per share (EPS) of HK$0.95 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The consensus price target fell 23% to HK$10.34, with the weaker earnings outlook clearly leading 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. Currently, the most bullish analyst values BOE Varitronix at HK$21.53 per share, while the most bearish prices it at HK$5.60. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that BOE Varitronix's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 19% growth on an annualised basis. This is compared to a historical growth rate of 29% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% per year. So it's pretty clear that, while BOE Varitronix's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BOE Varitronix. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of BOE Varitronix's future valuation.

Following on from that line of thought, we think that 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 BOE Varitronix going out to 2026, and you can see them free on our platform here..

Plus, you should also learn about the 1 warning sign we've spotted with BOE Varitronix .

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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.