Investors in Pony Testing Co., Ltd. (SZSE:300887) had a good week, as its shares rose 4.1% to close at CN¥8.38 following the release of its third-quarter results. It was a workmanlike result, with revenues of CN¥395m coming in 3.3% ahead of expectations, and statutory earnings per share of CN¥0.20, in line with analyst appraisals. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

After the latest results, the five analysts covering Pony Testing are now predicting revenues of CN¥2.46b in 2025. If met, this would reflect a sizeable 34% improvement in revenue compared to the last 12 months. Pony Testing is also expected to turn profitable, with statutory earnings of CN¥0.45 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥2.56b and earnings per share (EPS) of CN¥0.46 in 2025. 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 price target rose 9.2% to CN¥8.06, with the analysts apparently satisfied with the business performance despite lower revenue forecasts. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Pony Testing analyst has a price target of CN¥13.00 per share, while the most pessimistic values it at CN¥4.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pony Testing's past performance and to peers in the same industry. The analysts are definitely expecting Pony Testing's growth to accelerate, with the forecast 27% annualised growth to the end of 2025 ranking favourably alongside historical growth of 15% per annum over the past five 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 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. They also downgraded Pony Testing's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Pony Testing. Long-term earnings power is much more important than next year's profits. 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..

Before you take the next step you should know about the 2 warning signs for Pony Testing (1 is a bit unpleasant!) that we have uncovered.

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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.