Last week, you might have seen that Western Superconducting Technologies Co., Ltd. (SHSE:688122) released its full-year result to the market. The early response was not positive, with shares down 2.3% to CN¥36.82 in the past week. Revenues were in line with forecasts, at CN¥4.2b, although statutory earnings per share came in 15% below what the analysts expected, at CN¥1.16 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Western Superconducting Technologies' six analysts is for revenues of CN¥5.86b in 2024. This would reflect a huge 41% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 57% to CN¥1.81. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥5.93b and earnings per share (EPS) of CN¥1.91 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target fell 11% to CN¥51.49, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Western Superconducting Technologies analyst has a price target of CN¥59.56 per share, while the most pessimistic values it at CN¥43.42. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Western Superconducting Technologies' growth to accelerate, with the forecast 41% annualised growth to the end of 2024 ranking favourably alongside historical growth of 28% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Western Superconducting Technologies is expected to grow much faster than its industry.
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. 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. 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 Western Superconducting Technologies analysts - 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 Western Superconducting 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.