Shareholders of AAC Technologies Holdings Inc. (HKG:2018) will be pleased this week, given that the stock price is up 13% to HK$32.75 following its latest half-year results. It looks like a credible result overall - although revenues of CN¥11b were in line with what the analysts predicted, AAC Technologies Holdings surprised by delivering a statutory profit of CN¥0.46 per share, a notable 14% above 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.
Following the latest results, AAC Technologies Holdings' 25 analysts are now forecasting revenues of CN¥26.2b in 2024. This would be a meaningful 17% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 45% to CN¥1.36. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥25.9b and earnings per share (EPS) of CN¥1.25 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 11% to HK$33.96. 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. Currently, the most bullish analyst values AAC Technologies Holdings at HK$45.60 per share, while the most bearish prices it at HK$13.19. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that AAC Technologies Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 36% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.9% p.a. 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 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect AAC Technologies Holdings to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around AAC Technologies Holdings' earnings potential next year. 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 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 AAC Technologies Holdings going out to 2026, and you can see them free on our platform here..
You can also view our analysis of AAC Technologies Holdings' balance sheet, and whether we think AAC Technologies Holdings is carrying too much debt, for free on our platform here.
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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.
