Last week, you might have seen that Zhangzhou Pientzehuang Pharmaceutical., Ltd (SHSE:600436) released its quarterly result to the market. The early response was not positive, with shares down 9.2% to CN¥210 in the past week. Statutory earnings per share fell badly short of expectations, coming in at CN¥0.93, some 25% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at CN¥2.5b. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Zhangzhou Pientzehuang Pharmaceutical after the latest results.

Taking into account the latest results, the current consensus from Zhangzhou Pientzehuang Pharmaceutical's eleven analysts is for revenues of CN¥11.2b in 2024. This would reflect a modest 4.9% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 7.6% to CN¥5.31. In the lead-up to this report, the analysts had been modelling revenues of CN¥11.5b and earnings per share (EPS) of CN¥5.56 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥275 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Zhangzhou Pientzehuang Pharmaceutical analyst has a price target of CN¥358 per share, while the most pessimistic values it at CN¥182. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. It's pretty clear that there is an expectation that Zhangzhou Pientzehuang Pharmaceutical'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 14% 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 12% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Zhangzhou Pientzehuang Pharmaceutical.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zhangzhou Pientzehuang Pharmaceutical. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CN¥275, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Zhangzhou Pientzehuang Pharmaceutical going out to 2026, and you can see them free on our platform here.

We also provide an overview of the Zhangzhou Pientzehuang Pharmaceutical Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.

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