Lotus Pharmaceutical Co., Ltd. Just Missed Revenue By 5.2%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for Lotus Pharmaceutical Co., Ltd. (TWSE:1795), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Results look to have been somewhat negative - revenue fell 5.2% short of analyst estimates at NT$4.7b, and statutory earnings of NT$5.09 per share missed forecasts by 4.3%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Lotus Pharmaceutical

Taking into account the latest results, the current consensus from Lotus Pharmaceutical's four analysts is for revenues of NT$18.3b in 2024. This would reflect a modest 7.9% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 9.4% to NT$16.57. Yet prior to the latest earnings, the analysts had been anticipated revenues of NT$18.8b and earnings per share (EPS) of NT$18.21 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the NT$391 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Lotus Pharmaceutical at NT$600 per share, while the most bearish prices it at NT$307. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lotus Pharmaceutical's past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 16% growth on an annualised basis. That is in line with its 15% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 43% per year. So although Lotus Pharmaceutical is expected to maintain its revenue growth rate, it's forecast to grow slower than 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. 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 Lotus Pharmaceutical analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Lotus Pharmaceutical that you should be aware 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.