Earnings Release: Here's Why Analysts Cut Their J&T Global Express Limited (HKG:1519) Price Target To HK$9.35

J&T Global Express Limited (HKG:1519) shareholders are probably feeling a little disappointed, since its shares fell 3.2% to HK$6.60 in the week after its latest interim results. The result was fairly weak overall, with revenues of US$4.9b being 5.5% less than what the analysts had been modelling. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for J&T Global Express

Following the latest results, J&T Global Express' nine analysts are now forecasting revenues of US$10.3b in 2024. This would be a modest 6.6% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with J&T Global Express forecast to report a statutory profit of US$0.015 per share. Before this earnings report, the analysts had been forecasting revenues of US$10.5b and earnings per share (EPS) of US$0.014 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The analysts have cut their price target 13% to HK$9.35per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on J&T Global Express, with the most bullish analyst valuing it at HK$13.98 and the most bearish at HK$7.41 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that J&T Global Express' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 10% per year. So it's pretty clear that, while J&T Global Express' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards J&T Global Express following these results. They also downgraded J&T Global Express' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of J&T Global Express' 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. We have estimates - from multiple J&T Global Express analysts - going out to 2026, and you can see them free on our platform here.

We also provide an overview of the J&T Global Express Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.