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CooTek (Cayman) Inc. (NYSE:CTK) shares fell 3.6% to US$6.20 in the week since its latest full-year results. The results don't look great, especially considering that statutory losses grew 14% toUS$0.58 per share. Revenues of US$177,884,000 did beat expectations by 9.7%, but it looks like a bit of a cold comfort. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from CooTek (Cayman)'s only analyst is for revenues of US$482.0m in 2020, which would reflect a huge 171% improvement in sales compared to the last 12 months. CooTek (Cayman) is also expected to turn profitable, with statutory earnings of US$0.46 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$257.8m and earnings per share (EPS) of US$0.52 in 2020. Although sales sentiment looks to be improving, analysts have made a real cut to per-share earnings estimates, showing a sharp increase in pessimism after earnings.
Analysts also upgraded CooTek (Cayman)'s price target 21% to US$7.15, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the CooTek (Cayman)'s past performance and to peers in the same market. It's clear from the latest estimates that CooTek (Cayman)'s rate of growth is expected to accelerate meaningfully, with forecast 171% revenue growth noticeably faster than its historical growth of 59%p.a. over the past three years. Compare this with other companies in the same market, which are forecast to grow their revenue 12% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that CooTek (Cayman) is expected to grow much faster than its market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CooTek (Cayman). Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for CooTek (Cayman) going out as far as 2021, and you can see them free on our platform here.
We also provide an overview of the CooTek (Cayman) Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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