OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) Just Reported Earnings, And Analysts Cut Their Target Price

As you might know, OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) recently reported its quarterly numbers. Revenues of CN¥820m missed forecasts by 14%, but at least statutory losses were much smaller than expected, with per-share losses of CN¥0.85 coming in 21% smaller than what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on OneConnect Financial Technology after the latest results.

View our latest analysis for OneConnect Financial Technology

After the latest results, the eight analysts covering OneConnect Financial Technology are now predicting revenues of CN¥4.75b in 2021. If met, this would reflect a major 34% improvement in sales compared to the last 12 months. Losses are forecast to narrow 5.1% to CN¥3.02 per share. Before this earnings announcement, the analysts had been modelling revenues of CN¥4.76b and losses of CN¥3.21 per share in 2021. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 7.0% to US$22.76. It looks likethe analysts have become less optimistic about the overall business. 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. The most optimistic OneConnect Financial Technology analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$19.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 OneConnect Financial Technology'shistorical trends, as the 47% annualised revenue growth to the end of 2021 is roughly in line with the 44% 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 13% per year. So it's pretty clear that OneConnect Financial Technology is forecast to grow substantially faster than its 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, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of OneConnect Financial Technology's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on OneConnect Financial Technology. Long-term earnings power is much more important than next year's profits. We have forecasts for OneConnect Financial Technology going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for OneConnect Financial Technology that you should be aware 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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