Investors in BOE Varitronix Limited (HKG:710) had a good week, as its shares rose 4.6% to close at HK$4.28 following the release of its interim results. It was a workmanlike result, with revenues of HK$6.2b coming in 2.9% ahead of expectations, and statutory earnings per share of HK$0.60, in line with analyst appraisals. 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. 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 consensus forecast from BOE Varitronix's seven analysts is for revenues of HK$12.0b in 2024. This reflects a satisfactory 2.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to descend 13% to HK$0.49 in the same period. Before this earnings report, the analysts had been forecasting revenues of HK$11.9b and earnings per share (EPS) of HK$0.66 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

The average price target fell 7.7% to HK$7.56, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 BOE Varitronix, with the most bullish analyst valuing it at HK$9.90 and the most bearish at HK$5.00 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BOE Varitronix's past performance and to peers in the same industry. We would highlight that BOE Varitronix's revenue growth is expected to slow, with the forecast 5.3% annualised growth rate until the end of 2024 being well below the historical 27% p.a. growth over the last 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. Factoring in the forecast slowdown in growth, it seems obvious that BOE Varitronix is also expected to grow slower than other industry participants.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple BOE Varitronix analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - BOE Varitronix has 1 warning sign we think 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.