Shareholders might have noticed that Topchoice Medical Co., Inc. (SHSE:600763) filed its second-quarter result this time last week. The early response was not positive, with shares down 3.8% to CN¥41.19 in the past week. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at CN¥702m, statutory earnings beat expectations by a notable 39%, coming in at CN¥0.43 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Following the latest results, Topchoice Medical's eleven analysts are now forecasting revenues of CN¥3.04b in 2024. This would be a reasonable 5.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 7.8% to CN¥1.22. Before this earnings report, the analysts had been forecasting revenues of CN¥3.18b and earnings per share (EPS) of CN¥1.28 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of CN¥46.48, suggesting the downgrades are not expected to have a long-term impact on Topchoice Medical's valuation. 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. There are some variant perceptions on Topchoice Medical, with the most bullish analyst valuing it at CN¥55.69 and the most bearish at CN¥32.10 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Topchoice Medical's past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 11% growth on an annualised basis. That is in line with its 10% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So although Topchoice Medical is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

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. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Topchoice Medical. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Topchoice Medical going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Topchoice Medical that you should be aware of.

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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.