Today is shaping up negative for Niu Technologies (NASDAQ:NIU) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the latest consensus from Niu Technologies' seven analysts is for revenues of CN¥5.2b in 2023, which would reflect a huge 48% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 670% to CN¥3.53. Prior to this update, the analysts had been forecasting revenues of CN¥6.0b and earnings per share (EPS) of CN¥3.73 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.
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It'll come as no surprise then, to learn that the analysts have cut their price target 30% to CN¥60.73. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Niu Technologies at CN¥13.11 per share, while the most bearish prices it at CN¥4.52. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Niu Technologies' past performance and to peers in the same industry. It's clear from the latest estimates that Niu Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 37% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 29% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Niu Technologies to grow faster than the wider industry.
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 Niu Technologies. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Niu Technologies' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Niu Technologies after today.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Niu Technologies going out to 2024, 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.
What are the risks and opportunities for Niu Technologies?
Trading at 41.3% below our estimate of its fair value
Earnings are forecast to grow 59.37% per year
Profit margins (1%) are lower than last year (7%)
Volatile share price over the past 3 months
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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.