Analysts Have Been Trimming Their KE Holdings Inc. (NYSE:BEKE) Price Target After Its Latest Report

It's been a pretty great week for KE Holdings Inc. (NYSE:BEKE) shareholders, with its shares surging 11% to US$14.03 in the week since its latest annual results. It was a workmanlike result, with revenues of CN¥78b coming in 2.0% ahead of expectations, and statutory earnings per share of CN¥4.89, in line with analyst appraisals. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for KE Holdings

After the latest results, the 21 analysts covering KE Holdings are now predicting revenues of CN¥84.5b in 2024. If met, this would reflect a meaningful 8.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 5.3% to CN¥4.99. Before this earnings report, the analysts had been forecasting revenues of CN¥86.5b and earnings per share (EPS) of CN¥5.13 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The consensus price target fell 11% to US$20.85, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values KE Holdings at US$30.31 per share, while the most bearish prices it at US$15.00. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 8.6% growth on an annualised basis. That is in line with its 9.9% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 10% annually. So although KE Holdings is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for KE Holdings. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of KE Holdings' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on KE Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple KE Holdings analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with KE Holdings , and understanding these should be part of your investment process.

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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.