Earnings Update: BlueCity Holdings Limited (NASDAQ:BLCT) Just Reported Its Full-Year Results And Analysts Are Updating Their Forecasts

Shareholders in BlueCity Holdings Limited (NASDAQ:BLCT) had a terrible week, as shares crashed 29% to US$8.92 in the week since its latest full-year results. The result was fairly weak overall, with revenues of CN¥1.0b being 2.2% less than what the analysts had been modelling. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on BlueCity Holdings after the latest results.

See our latest analysis for BlueCity Holdings

Taking into account the latest results, the consensus forecast from BlueCity Holdings' three analysts is for revenues of CN¥1.43b in 2021, which would reflect a huge 39% improvement in sales compared to the last 12 months. BlueCity Holdings is also expected to turn profitable, with statutory earnings of CN¥1.86 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥1.46b and earnings per share (EPS) of CN¥1.86 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of CN¥119, showing that the business is executing well and in line with expectations. 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. The most optimistic BlueCity Holdings analyst has a price target of CN¥20.14 per share, while the most pessimistic values it at CN¥14.86. This is a very narrow spread of estimates, implying either that BlueCity Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 can infer from the latest estimates that forecasts expect a continuation of BlueCity Holdings'historical trends, as the 39% annualised revenue growth to the end of 2021 is roughly in line with the 36% annual revenue growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 16% per year. So although BlueCity Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CN¥119, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on BlueCity Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple BlueCity Holdings analysts - going out to 2024, 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 BlueCity Holdings that you need to be mindful of.

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This article by Simply Wall St is general in nature. 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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