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Shareholders in Genetron Holdings Limited (NASDAQ:GTH) had a terrible week, as shares crashed 21% to US$18.25 in the week since its latest full-year results. It was a pretty bad result overall; while revenues were in line with expectations at CN¥424m, statutory losses exploded to CN¥50.78 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the four analysts covering Genetron Holdings are now predicting revenues of CN¥619.0m in 2021. If met, this would reflect a major 46% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 97% to CN¥1.62. Before this latest report, the consensus had been expecting revenues of CN¥631.4m and CN¥1.62 per share in losses.
The average price target fell 8.0% to US$26.22, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Genetron Holdings analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$20.00. 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 Genetron Holdings shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Genetron Holdings' growth to accelerate, with the forecast 46% annualised growth to the end of 2021 ranking favourably alongside historical growth of 34% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Genetron Holdings to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 Genetron Holdings going out to 2025, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Genetron Holdings that you should be aware of.
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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