Last week saw the newest yearly earnings release from Akeso, Inc. (HKG:9926), an important milestone in the company's journey to build a stronger business. Akeso missed revenue estimates by 6.0%, coming in atCN¥4.5b, although statutory earnings per share (EPS) of CN¥2.42 beat expectations, coming in 8.5% ahead of analyst estimates. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the consensus from Akeso's 17 analysts is for revenues of CN¥2.53b in 2024, which would reflect a substantial 44% decline in revenue compared to the last year of performance. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -CN¥0.49 per share in 2024. Before this earnings announcement, the analysts had been modelling revenues of CN¥2.90b and losses of CN¥0.44 per share in 2024. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
There was no major change to the consensus price target of HK$58.55, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Akeso analyst has a price target of HK$68.83 per share, while the most pessimistic values it at HK$48.96. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 44% annualised decline to the end of 2024. That is a notable change from historical growth of 87% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 26% annually for the foreseeable future. It's pretty clear that Akeso's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at HK$58.55, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Akeso. Long-term earnings power is much more important than next year's profits. We have forecasts for Akeso going out to 2026, and you can see them free on our platform here.
It might also be worth considering whether Akeso's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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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.