Sino Biopharmaceutical Limited Just Missed EPS By 16%: Here's What Analysts Think Will Happen Next
It's shaping up to be a tough period for Sino Biopharmaceutical Limited (HKG:1177), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥24b, statutory earnings missed forecasts by 16%, coming in at just CN¥0.21 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Sino Biopharmaceutical
Following the latest results, Sino Biopharmaceutical's 20 analysts are now forecasting revenues of CN¥27.9b in 2020. This would be a decent 15% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 26% to CN¥0.27. In the lead-up to this report, the analysts had been modelling revenues of CN¥29.1b and earnings per share (EPS) of CN¥0.30 in 2020. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
The analysts made no major changes to their price target of HK$12.65, suggesting the downgrades are not expected to have a long-term impact on Sino Biopharmaceutical'svaluation. 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 Sino Biopharmaceutical analyst has a price target of HK$16.60 per share, while the most pessimistic values it at HK$9.50. 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 Sino Biopharmaceutical shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 15%, in line with its 18% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 16% next year. So although Sino Biopharmaceutical is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. 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.
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 Sino Biopharmaceutical going out to 2024, and you can see them free on our platform here..
Before you take the next step you should know about the 1 warning sign for Sino Biopharmaceutical that we have uncovered.
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