Revenue Downgrade: Here's What Analysts Forecast For Yatsen Holding Limited (NYSE:YSG)

The analysts covering Yatsen Holding Limited (NYSE:YSG) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Yatsen Holding recently, with the stock price up an impressive 13% to US$3.06 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the current consensus from Yatsen Holding's six analysts is for revenues of CN¥7.8b in 2022 which - if met - would reflect a sizeable 24% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 79% to CN¥0.89. Yet before this consensus update, the analysts had been forecasting revenues of CN¥9.0b and losses of CN¥0.86 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Yatsen Holding

There was no major change to the consensus price target of CN¥34.25, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Yatsen Holding analyst has a price target of CN¥10.34 per share, while the most pessimistic values it at CN¥2.90. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yatsen Holding's past performance and to peers in the same industry. We would highlight that Yatsen Holding's revenue growth is expected to slow, with the forecast 19% annualised growth rate until the end of 2022 being well below the historical 49% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.8% annually. So it's pretty clear that, while Yatsen Holding's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Yatsen Holding. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Yatsen Holding after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Yatsen Holding analysts - going out to 2023, and you can see them free on our platform here.

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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.

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