It's shaping up to be a tough period for AK Medical Holdings Limited (HKG:1789), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.1b missed by 15%, and statutory earnings per share of CN¥0.16 fell short of forecasts by 29%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for AK Medical Holdings from five analysts is for revenues of CN¥1.49b in 2024. If met, it would imply a substantial 37% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 56% to CN¥0.25. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.61b and earnings per share (EPS) of CN¥0.29 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.
It'll come as no surprise then, to learn that the analysts have cut their price target 10% to HK$8.59. 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. There are some variant perceptions on AK Medical Holdings, with the most bullish analyst valuing it at HK$11.88 and the most bearish at HK$6.60 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AK Medical Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that AK Medical Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 37% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.3% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 22% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that AK Medical Holdings is expected to grow much faster than its 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 AK Medical Holdings' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of AK Medical Holdings' future valuation.
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 forecasts for AK Medical Holdings going out to 2026, and you can see them free on our platform here.
We also provide an overview of the AK Medical Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.