One thing we could say about the analysts on Television Broadcasts Limited (HKG:511) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the dual analysts covering Television Broadcasts are now predicting revenues of HK$3.6b in 2023. If met, this would reflect a credible 7.3% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 53% to HK$1.07 per share. However, before this estimates update, the consensus had been expecting revenues of HK$4.0b and HK$0.87 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for Television Broadcasts
The consensus price target fell 14% to HK$7.65, implicitly signalling that lower earnings per share are a leading indicator for Television Broadcasts' valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Television Broadcasts' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 7.3% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 7.1% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually for the foreseeable future. So although Television Broadcasts' revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Television Broadcasts. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Television Broadcasts.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.