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

Zhihu Inc. (NYSE:ZH) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 2.4%to hit CN¥934m. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Zhihu

Following the recent earnings report, the consensus from six analysts covering Zhihu is for revenues of CN¥3.59b in 2024. This implies a definite 11% decline in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 52% to CN¥3.16. Before this earnings announcement, the analysts had been modelling revenues of CN¥3.57b and losses of CN¥6.16 per share in 2024. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a considerable decrease in losses per share in particular.

There's been no major changes to the consensus price target of US$5.55, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. 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 Zhihu at US$8.03 per share, while the most bearish prices it at US$3.62. 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 22% by the end of 2024. This indicates a significant reduction from annual growth of 19% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Zhihu is expected to lag 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Zhihu's revenue is expected to perform worse than the wider industry. 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.

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 estimates - from multiple Zhihu analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Zhihu you should know about.

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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.