Analyst Estimates: Here's What Brokers Think Of 360 DigiTech, Inc. (NASDAQ:QFIN) After Its Third-Quarter Report

360 DigiTech, Inc. (NASDAQ:QFIN) just released its latest third-quarter report and things are not looking great. Results look to have been somewhat negative - revenue fell 3.4% short of analyst estimates at CN¥4.1b, and statutory earnings of CN¥6.18 per share missed forecasts by 3.3%. 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.

Our analysis indicates that QFIN is potentially undervalued!

Taking into account the latest results, the consensus forecast from 360 DigiTech's nine analysts is for revenues of CN¥18.7b in 2023, which would reflect a decent 9.7% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 18% to CN¥34.04. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥19.2b and earnings per share (EPS) of CN¥34.40 in 2023. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of US$21.68, showing that the analysts don't expect weaker sales expectations next year to have a material impact on 360 DigiTech's market 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. Currently, the most bullish analyst values 360 DigiTech at US$36.64 per share, while the most bearish prices it at US$15.89. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. We would highlight that 360 DigiTech's revenue growth is expected to slow, with the forecast 7.7% annualised growth rate until the end of 2023 being well below the historical 38% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.0% annually. So it's pretty clear that, while 360 DigiTech's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$21.68, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for 360 DigiTech going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for 360 DigiTech that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.