Analysts Have Been Trimming Their Beijing Capital International Airport Company Limited (HKG:694) Price Target After Its Latest Report

The analysts might have been a bit too bullish on Beijing Capital International Airport Company Limited (HKG:694), given that the company fell short of expectations when it released its full-year results last week. Revenues missed expectations somewhat, coming in at CN¥4.6b, but statutory earnings fell catastrophically short, with a loss of CN¥0.37 some 21% larger than what the analysts had predicted. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Beijing Capital International Airport

After the latest results, the eight analysts covering Beijing Capital International Airport are now predicting revenues of CN¥6.49b in 2024. If met, this would reflect a sizeable 42% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Beijing Capital International Airport forecast to report a statutory profit of CN¥0.15 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥6.63b and earnings per share (EPS) of CN¥0.064 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the considerable lift to to the earnings per share numbers.

The analysts have cut their price target 10% to HK$3.40per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Beijing Capital International Airport analyst has a price target of HK$6.33 per share, while the most pessimistic values it at HK$2.08. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Beijing Capital International Airport is forecast to grow faster in the future than it has in the past, with revenues expected to display 42% annualised growth until the end of 2024. If achieved, this would be a much better result than the 34% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.9% annually. Not only are Beijing Capital International Airport's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Beijing Capital International Airport's earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Beijing Capital International Airport's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Beijing Capital International Airport. Long-term earnings power is much more important than next year's profits. We have forecasts for Beijing Capital International Airport going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Beijing Capital International Airport that you need to be mindful of.

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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.