Universal Scientific Industrial (Shanghai) Co., Ltd. (SHSE:601231) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 2.2% to hit CN¥14b. Universal Scientific Industrial (Shanghai) also reported a statutory profit of CN¥0.21, which was an impressive 32% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Universal Scientific Industrial (Shanghai)'s eight analysts is for revenues of CN¥63.9b in 2024. This reflects a modest 4.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to swell 12% to CN¥1.01. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥63.9b and earnings per share (EPS) of CN¥1.01 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of CN¥18.84, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Universal Scientific Industrial (Shanghai) at CN¥20.00 per share, while the most bearish prices it at CN¥17.50. This is a very narrow spread of estimates, implying either that Universal Scientific Industrial (Shanghai) is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Universal Scientific Industrial (Shanghai)'s revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.6% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% annually. Factoring in the forecast slowdown in growth, it seems obvious that Universal Scientific Industrial (Shanghai) is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Universal Scientific Industrial (Shanghai)'s revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Universal Scientific Industrial (Shanghai). Long-term earnings power is much more important than next year's profits. We have forecasts for Universal Scientific Industrial (Shanghai) going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Universal Scientific Industrial (Shanghai) , and understanding this should be part of your investment process.
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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.