The analysts might have been a bit too bullish on Dada Nexus Limited (NASDAQ:DADA), given that the company fell short of expectations when it released its annual results last week. It was a pretty negative result overall, with revenues of CN¥11b missing analyst predictions by 6.7%. Worse, the business reported a statutory loss of CN¥7.52 per share, much larger than the analysts had forecast prior to the result. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Dada Nexus' nine analysts is for revenues of CN¥11.6b in 2024. This reflects a decent 11% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Dada Nexus forecast to report a statutory profit of CN¥0.21 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥13.3b and earnings per share (EPS) of CN¥0.27 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
The analysts made no major changes to their price target of US$4.55, suggesting the downgrades are not expected to have a long-term impact on Dada Nexus' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Dada Nexus analyst has a price target of US$9.38 per share, while the most pessimistic values it at US$1.78. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Dada Nexus' revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 29% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% per year. So it's pretty clear that, while Dada Nexus' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dada Nexus. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at US$4.55, with the latest estimates not enough to have an impact on their price targets.
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 Dada Nexus going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Dada Nexus you should be aware of, and 1 of them doesn't sit too well with us.
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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.