Bullish: Analysts Just Made A Decent Upgrade To Their COSCO SHIPPING Ports Limited (HKG:1199) Forecasts

COSCO SHIPPING Ports Limited (HKG:1199) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 4.9% over the past week, closing at HK$6.65. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the current consensus from COSCO SHIPPING Ports' six analysts is for revenues of US$1.2b in 2021 which - if met - would reflect a notable 18% increase on its sales over the past 12 months. Per-share earnings are expected to rise 8.5% to US$0.11. Prior to this update, the analysts had been forecasting revenues of US$1.1b and earnings per share (EPS) of US$0.098 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for COSCO SHIPPING Ports

It will come as no surprise to learn that the analysts have increased their price target for COSCO SHIPPING Ports 6.1% to US$0.96 on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on COSCO SHIPPING Ports, with the most bullish analyst valuing it at US$9.40 and the most bearish at US$5.17 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that COSCO SHIPPING Ports' rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that COSCO SHIPPING Ports is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, COSCO SHIPPING Ports could be worth investigating further.

Analysts are definitely bullish on COSCO SHIPPING Ports, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. You can learn more, and discover the 3 other warning signs 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. 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.
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