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Yunji Inc. (NASDAQ:YJ) Analysts Are Reducing Their Forecasts For This Year

Today is shaping up negative for Yunji Inc. (NASDAQ:YJ) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the consensus from three analysts covering Yunji is for revenues of CN¥9.8b in 2020, implying a chunky 16% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 99% to CN¥0.048. Prior to this update, the analysts had been forecasting revenues of CN¥21b and earnings per share (EPS) of CN¥2.46 in 2020. So we can see that the consensus has become notably more bearish on Yunji's outlook with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

See our latest analysis for Yunji

NasdaqGM:YJ Past and Future Earnings March 31st 2020
NasdaqGM:YJ Past and Future Earnings March 31st 2020

The consensus price target fell 37% to CN¥30.20, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on Yunji, with the most bullish analyst valuing it at CN¥35.31 and the most bearish at CN¥26.13 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Yunji shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 16%, a significant reduction from annual growth of 39% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Yunji is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Yunji to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Yunji.

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 Yunji analysts - going out to 2022, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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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