Cambricon Technologies Corporation Limited (SHSE:688256) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Earnings missed the mark, with revenues of CN¥26m falling badly (74%) short of expectations. Losses were mildly higher, with a CN¥0.54 per-share loss being 3.8% above what the analysts modelled. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, the most recent consensus for Cambricon Technologies from five analysts is for revenues of CN¥1.70b in 2024. If met, it would imply a major 158% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 40% to CN¥1.19. Before this latest report, the consensus had been expecting revenues of CN¥1.42b and CN¥1.37 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

It will come as no surprise to learn thatthe analysts have increased their price target for Cambricon Technologies 11% to CN¥127on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Cambricon Technologies, with the most bullish analyst valuing it at CN¥210 and the most bearish at CN¥84.40 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. The analysts are definitely expecting Cambricon Technologies' growth to accelerate, with the forecast 254% annualised growth to the end of 2024 ranking favourably alongside historical growth of 7.3% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 23% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Cambricon Technologies is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Cambricon Technologies 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 Cambricon Technologies 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.