What You Need To Know About The Kerry Logistics Network Limited (HKG:636) Analyst Downgrade Today

One thing we could say about the analysts on Kerry Logistics Network Limited (HKG:636) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. At HK$8.79, shares are up 4.1% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the latest consensus from Kerry Logistics Network's seven analysts is for revenues of HK$51b in 2024, which would reflect a reasonable 7.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 21% to HK$0.81. Before this latest update, the analysts had been forecasting revenues of HK$56b and earnings per share (EPS) of HK$0.87 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

See our latest analysis for Kerry Logistics Network

Analysts made no major changes to their price target of HK$11.33, suggesting the downgrades are not expected to have a long-term impact on Kerry Logistics Network's valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Kerry Logistics Network's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.1% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kerry Logistics Network.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Kerry Logistics Network. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Kerry Logistics Network after today.

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 Kerry Logistics Network analysts - going out to 2026, 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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