Byhealth Co., Ltd (SZSE:300146) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Byhealth reported in line with analyst predictions, delivering revenues of CN¥9.4b and statutory earnings per share of CN¥1.03, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

After the latest results, the nine analysts covering Byhealth are now predicting revenues of CN¥10.4b in 2024. If met, this would reflect a notable 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 9.3% to CN¥1.12. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥10.5b and earnings per share (EPS) of CN¥1.21 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The average price target fell 7.1% to CN¥22.99, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. Currently, the most bullish analyst values Byhealth at CN¥31.00 per share, while the most bearish prices it at CN¥18.20. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Byhealth's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. Factoring in the forecast slowdown in growth, it seems obvious that Byhealth is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Byhealth's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Byhealth analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Byhealth that you should be aware of.

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