It's been a good week for Venustech Group Inc. (SZSE:002439) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.2% to CN¥13.21. Statutory results overall were mixed, with revenues coming in 21% lower than the analysts predicted. What's really surprising is that losses of CN¥0.06 per share were 43% smaller than what was predicted. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Venustech Group from 17 analysts is for revenues of CN¥5.15b in 2024. If met, it would imply a notable 13% increase on its revenue over the past 12 months. Per-share earnings are expected to shoot up 122% to CN¥0.69. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥5.38b and earnings per share (EPS) of CN¥0.73 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
It'll come as no surprise then, to learn that the analysts have cut their price target 5.3% to CN¥23.15. 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 Venustech Group, with the most bullish analyst valuing it at CN¥28.00 and the most bearish at CN¥17.50 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Venustech Group's rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% 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 18% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Venustech Group to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Venustech Group. They also downgraded Venustech Group's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Venustech Group's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Venustech Group analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Venustech Group 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.
