GDS Holdings Limited (NASDAQ:GDS) shareholders are probably feeling a little disappointed, since its shares fell 3.3% to US$89.81 in the week after its latest third-quarter results. Revenues of CN¥1.5b beat expectations by a respectable 2.7%, although statutory losses per share increased. GDS Holdings lost CN¥1.42, which was 360% more than what the analysts had included in their models. 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.
After the latest results, the 20 analysts covering GDS Holdings are now predicting revenues of CN¥8.00b in 2021. If met, this would reflect a substantial 51% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 83% to CN¥0.53. Before this earnings announcement, the analysts had been modelling revenues of CN¥8.04b and losses of CN¥0.37 per share in 2021. So it's pretty clear the analysts have mixed opinions on GDS Holdings even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.
As a result, there was no major change to the consensus price target of CN¥683, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. There are some variant perceptions on GDS Holdings, with the most bullish analyst valuing it at CN¥116 and the most bearish at CN¥70.29 per share. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that GDS Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 51% revenue growth noticeably faster than its historical growth of 41%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect GDS Holdings to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. 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¥683, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for GDS Holdings going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for GDS Holdings that you should be aware of.
If you’re looking to trade GDS Holdings, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.