It's been a good week for DouYu International Holdings Limited (NASDAQ:DOYU) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.3% to US$7.84. Revenues of CN¥1.9b were in line with expectations, although losses per share came were CN¥0.59, some 13% smaller than was expected. 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. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the latest consensus from DouYu International Holdings's six analysts is for revenues of CN¥9.98b in 2020, which would reflect a huge 56% improvement in sales compared to the last 12 months. Earnings are expected to improve, with DouYu International Holdings forecast to report a profit of CN¥2.91 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of CN¥9.99b and earnings per share (EPS) of CN¥2.94 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at CN¥74.53. 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. There are some variant perceptions on DouYu International Holdings, with the most bullish analyst valuing it at CN¥84.35 and the most bearish at CN¥64.73 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how DouYu International Holdings forecasts compare to the wider market's forecast performance. We can infer from the latest estimates that analysts are expecting a continuation of DouYu International Holdings's historical trends, as next year's forecast 56% revenue growth is roughly in line with 54% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although DouYu International Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for DouYu International Holdings going out to 2022, and you can see them free on our platform here.
We also provide an overview of the DouYu International Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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