The analysts might have been a bit too bullish on Yifeng Pharmacy Chain Co., Ltd. (SHSE:603939), given that the company fell short of expectations when it released its quarterly results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥5.8b, statutory earnings missed forecasts by 12%, coming in at just CN¥0.33 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Yifeng Pharmacy Chain after the latest results.

Taking into account the latest results, the most recent consensus for Yifeng Pharmacy Chain from 16 analysts is for revenues of CN¥25.0b in 2024. If met, it would imply a modest 5.7% increase on its revenue over the past 12 months. Per-share earnings are expected to climb 16% to CN¥1.43. In the lead-up to this report, the analysts had been modelling revenues of CN¥27.0b and earnings per share (EPS) of CN¥1.44 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of CN¥41.66, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Yifeng Pharmacy Chain's market value. 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 Yifeng Pharmacy Chain at CN¥48.33 per share, while the most bearish prices it at CN¥29.90. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yifeng Pharmacy Chain's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Yifeng Pharmacy Chain's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. Compare this to the 26 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. So it's pretty clear that, while Yifeng Pharmacy Chain's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Yifeng Pharmacy Chain. Long-term earnings power is much more important than next year's profits. We have forecasts for Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain , 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.