It's shaping up to be a tough period for BOE Varitronix Limited (HKG:710), which a week ago released some disappointing full-year 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 HK$11b, statutory earnings missed forecasts by 14%, coming in at just HK$0.60 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for BOE Varitronix from seven analysts is for revenues of HK$14.2b in 2024. If met, it would imply a major 32% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 58% to HK$0.95. In the lead-up to this report, the analysts had been modelling revenues of HK$14.6b and earnings per share (EPS) of HK$0.95 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The average price target was reduced 7.2% to HK$12.48, with the lower revenue forecasts indicating negative sentiment towards BOE Varitronix, even though earnings forecasts were unchanged. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic BOE Varitronix analyst has a price target of HK$21.53 per share, while the most pessimistic values it at HK$6.70. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 32% growth on an annualised basis. That is in line with its 29% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. So it's pretty clear that BOE Varitronix is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple BOE Varitronix analysts - going out to 2025, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for BOE Varitronix that you need to take into consideration.
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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.