Shareholders of Everest Medicines Limited (HKG:1952) will be pleased this week, given that the stock price is up 11% to HK$20.70 following its latest interim results. The results overall were pretty much dead in line with analyst forecasts; revenues were CN¥302m and statutory losses were CN¥1.97 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the five analysts covering Everest Medicines are now predicting revenues of CN¥668.9m in 2024. If met, this would reflect a huge 60% improvement in revenue compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to CN¥2.97. Before this earnings announcement, the analysts had been modelling revenues of CN¥670.4m and losses of CN¥2.04 per share in 2024. So it's pretty clear the analysts have mixed opinions on Everest Medicines even after this update; although they reconfirmed their revenue numbers, it came at the cost of a considerable increase to per-share losses.
As a result, there was no major change to the consensus price target of HK$26.23, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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 Everest Medicines, with the most bullish analyst valuing it at HK$30.30 and the most bearish at HK$24.49 per share. This is a very narrow spread of estimates, implying either that Everest Medicines is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Everest Medicines' past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 155% growth on an annualised basis. That is in line with its 140% annual growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 27% annually. So although Everest Medicines is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at HK$26.23, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Everest Medicines. Long-term earnings power is much more important than next year's profits. We have forecasts for Everest Medicines going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Everest Medicines that we have uncovered.
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