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OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like weak result overall, with ongoing losses and revenues of CN¥820m falling short of analyst predictions. The losses were a relative bright spot though, with a per-share (statutory) loss of CN¥0.85 being 21% smaller than what the analysts had presumed. The 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 statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, OneConnect Financial Technology's eight analysts are now forecasting revenues of CN¥4.75b in 2021. This would be a sizeable 34% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to CN¥3.02. Before this earnings announcement, the analysts had been modelling revenues of CN¥4.76b and losses of CN¥3.21 per share in 2021. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 7.0% to US$22.76. It looks likethe analysts have become less optimistic about the overall business. 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. The most optimistic OneConnect Financial Technology analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$19.00. 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 OneConnect Financial Technology shareholders.
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. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 47% growth on an annualised basis. That is in line with its 44% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So it's pretty clear that OneConnect Financial Technology is forecast to grow substantially faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for OneConnect Financial Technology going out to 2025, and you can see them free on our platform here..
It is also worth noting that we have found 3 warning signs for OneConnect Financial Technology that you need to take into consideration.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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