Zhihu Inc. (NYSE:ZH) Second-Quarter Results: Here's What Analysts Are Forecasting For This Year

It's been a sad week for Zhihu Inc. (NYSE:ZH), who've watched their investment drop 14% to US$0.95 in the week since the company reported its quarterly result. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Zhihu after the latest results.

View our latest analysis for Zhihu

After the latest results, the eleven analysts covering Zhihu are now predicting revenues of CN¥4.26b in 2023. If met, this would reflect an okay 4.9% improvement in revenue compared to the last 12 months. Per-share losses are predicted to creep up to CN¥1.58. Before this earnings announcement, the analysts had been modelling revenues of CN¥4.63b and losses of CN¥1.78 per share in 2023. Although the revenue estimates have fallen somewhat, Zhihu'sfuture looks a little different to the past, with a cut to the loss per share forecasts in particular.

The consensus price target was broadly unchanged at US$1.78, implying that the business is performing roughly in line with expectations, despite adjustments to both revenue and earnings estimates. 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 Zhihu analyst has a price target of US$2.58 per share, while the most pessimistic values it at US$1.16. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company 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 Zhihu's past performance and to peers in the same industry. We would highlight that Zhihu's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2023 being well below the historical 41% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 10% annually. Factoring in the forecast slowdown in growth, it looks like Zhihu is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Still, earnings per share are more important to value creation for shareholders. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Zhihu going out to 2025, and you can see them free on our platform here..

You can also see our analysis of Zhihu's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.