The interim results for Pony Testing Co., Ltd. (SZSE:300887) were released last week, making it a good time to revisit its performance. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥728m, statutory earnings were in line with expectations, at CN¥0.20 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. 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 current consensus from Pony Testing's six analysts is for revenues of CN¥2.44b in 2024. This would reflect a major 22% increase on its revenue over the past 12 months. Pony Testing is also expected to turn profitable, with statutory earnings of CN¥0.58 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.70b and earnings per share (EPS) of CN¥0.72 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

The consensus price target fell 12% to CN¥9.48, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Pony Testing at CN¥13.50 per share, while the most bearish prices it at CN¥6.40. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's clear from the latest estimates that Pony Testing's rate of growth is expected to accelerate meaningfully, with the forecast 48% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.8% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Pony Testing is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pony Testing. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Pony Testing going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Pony Testing you should be aware of, and 1 of them shouldn't be ignored.

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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.