MTR Corporation Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Last week, you might have seen that MTR Corporation Limited (HKG:66) released its half-yearly result to the market. The early response was not positive, with shares down 2.4% to HK$27.30 in the past week. MTR missed revenue estimates by 8.5%, coming in atHK$27b, although statutory earnings per share (EPS) of HK$1.24 beat expectations, coming in 7.8% ahead of analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the current consensus, from the 13 analysts covering MTR, is for revenues of HK$56.9b in 2025. This implies a measurable 2.0% reduction in MTR's revenue over the past 12 months. Statutory earnings per share are forecast to decrease 7.2% to HK$2.60 in the same period. In the lead-up to this report, the analysts had been modelling revenues of HK$59.8b and earnings per share (EPS) of HK$2.78 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

See our latest analysis for MTR

Despite the cuts to forecast earnings, there was no real change to the HK$28.09 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic MTR analyst has a price target of HK$32.00 per share, while the most pessimistic values it at HK$22.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 4.0% annualised decline to the end of 2025. That is a notable change from historical growth of 7.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - MTR is expected to lag the wider industry.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 MTR analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - MTR has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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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.