Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (SHSE:600196) shareholders are probably feeling a little disappointed, since its shares fell 4.3% to CN¥23.07 in the week after its latest annual results. Statutory earnings per share fell badly short of expectations, coming in at CN¥0.89, some 28% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at CN¥41b. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the seven analysts covering Shanghai Fosun Pharmaceutical (Group) are now predicting revenues of CN¥46.4b in 2024. If met, this would reflect a notable 12% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 64% to CN¥1.46. In the lead-up to this report, the analysts had been modelling revenues of CN¥46.1b and earnings per share (EPS) of CN¥1.54 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at CN¥31.18, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Shanghai Fosun Pharmaceutical (Group) analyst has a price target of CN¥38.70 per share, while the most pessimistic values it at CN¥24.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Shanghai Fosun Pharmaceutical (Group) shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Fosun Pharmaceutical (Group)'s past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 13% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 15% annually. So it's pretty clear that Shanghai Fosun Pharmaceutical (Group) is expected to grow slower than similar companies in the same industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shanghai Fosun Pharmaceutical (Group). On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CN¥31.18, 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 Shanghai Fosun Pharmaceutical (Group). Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shanghai Fosun Pharmaceutical (Group) analysts - going out to 2026, and you can see them free on our platform here.
Even so, be aware that Shanghai Fosun Pharmaceutical (Group) is showing 2 warning signs in our investment analysis , you should know about...
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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.