CSPC Pharmaceutical Group Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
The analysts might have been a bit too bullish on CSPC Pharmaceutical Group Limited (HKG:1093), given that the company fell short of expectations when it released its yearly results last week. CSPC Pharmaceutical Group missed analyst forecasts, with revenues of CN¥22b and statutory earnings per share (EPS) of CN¥0.58, falling short by 2.9% and 6.5% respectively. 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.
View our latest analysis for CSPC Pharmaceutical Group
After the latest results, the 25 analysts covering CSPC Pharmaceutical Group are now predicting revenues of CN¥25.6b in 2020. If met, this would reflect a decent 16% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 17% to CN¥0.69. Before this earnings report, the analysts had been forecasting revenues of CN¥28.1b and earnings per share (EPS) of CN¥0.77 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share numbers.
The analysts made no major changes to their price target of HK$21.87, suggesting the downgrades are not expected to have a long-term impact on CSPC Pharmaceutical Group'svaluation. 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 CSPC Pharmaceutical Group at HK$27.20 per share, while the most bearish prices it at HK$17.00. 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.
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 pretty clear that there is an expectation that CSPC Pharmaceutical Group's revenue growth will slow down substantially, with revenues next year expected to grow 16%, compared to a historical growth rate of 21% over the past five years. Compare this to the 35 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 16% per year. Factoring in the forecast slowdown in growth, it looks like CSPC Pharmaceutical Group is forecast to grow at about the same rate as 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 CSPC Pharmaceutical Group. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target held steady at CN¥21.87, with the latest estimates not enough to have an impact on their price targets.
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 CSPC Pharmaceutical Group going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for CSPC Pharmaceutical Group that you need to be mindful of.
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