Chongqing Zhifei Biological Products Co., Ltd. (SZSE:300122) missed earnings with its latest second-quarter results, disappointing overly-optimistic forecasters. Chongqing Zhifei Biological Products delivered a grave earnings miss, with both revenues (CN¥6.9b) and statutory earnings per share (CN¥0.32) falling badly short of analyst expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Taking into account the latest results, the current consensus from Chongqing Zhifei Biological Products' 13 analysts is for revenues of CN¥56.6b in 2024. This would reflect a sizeable 21% increase on its revenue over the past 12 months. Per-share earnings are expected to grow 14% to CN¥2.88. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥57.5b and earnings per share (EPS) of CN¥4.09 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥48.29, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Chongqing Zhifei Biological Products, with the most bullish analyst valuing it at CN¥95.88 and the most bearish at CN¥28.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. The analysts are definitely expecting Chongqing Zhifei Biological Products' growth to accelerate, with the forecast 47% annualised growth to the end of 2024 ranking favourably alongside historical growth of 34% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 25% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Chongqing Zhifei Biological Products is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Chongqing Zhifei Biological Products. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. 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 Chongqing Zhifei Biological Products. Long-term earnings power is much more important than next year's profits. We have forecasts for Chongqing Zhifei Biological Products going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Chongqing Zhifei Biological Products that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.