Shorn Like A Sheep: Analysts Just Shaved Their Wasion Holdings Limited (HKG:3393) Forecasts Dramatically
The analysts covering Wasion Holdings Limited (HKG:3393) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
After this downgrade, Wasion Holdings' four analysts are now forecasting revenues of CN¥3.8b in 2020. This would be a modest 4.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to be CN¥0.29, roughly flat on the last 12 months. Prior to this update, the analysts had been forecasting revenues of CN¥4.5b and earnings per share (EPS) of CN¥0.39 in 2020. Indeed, we can see that the analysts are a lot more bearish about Wasion Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Wasion Holdings
It'll come as no surprise then, to learn that the analysts have cut their price target 17% to CN¥3.49. 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. Currently, the most bullish analyst values Wasion Holdings at CN¥4.23 per share, while the most bearish prices it at CN¥3.20. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that Wasion Holdings is an easy business to forecast or that the underlying assumptions are knowable.
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. We can infer from the latest estimates that forecasts expect a continuation of Wasion Holdings'historical trends, as next year's 4.9% revenue growth is roughly in line with 5.0% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So although Wasion Holdings is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Wasion Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Wasion Holdings.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Wasion Holdings analysts - going out to 2022, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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