One thing we could say about the analysts on Noah Holdings Limited (NYSE:NOAH) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At US$8.41, shares are up 4.5% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After the downgrade, the consensus from Noah Holdings' eight analysts is for revenues of CN¥2.5b in 2024, which would reflect an uneasy 9.8% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing CN¥3.1b of revenue in 2024. It looks like forecasts have become a fair bit less optimistic on Noah Holdings, given the substantial drop in revenue estimates.

Notably, the analysts have cut their price target 7.0% to CN¥108, suggesting concerns around Noah Holdings' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Noah Holdings analyst has a price target of CN¥173 per share, while the most pessimistic values it at CN¥64.10. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One more thing stood out to us about these estimates, and it's the idea that Noah Holdings' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 19% to the end of 2024. This tops off a historical decline of 1.5% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.5% annually. So while a broad number of companies are forecast to grow, unfortunately Noah Holdings is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Noah Holdings after today.

Want more information? At least one of Noah Holdings' eight analysts has provided estimates out to 2026, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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