Last week, you might have seen that Tianqi Lithium Corporation (SZSE:002466) released its full-year result to the market. The early response was not positive, with shares down 3.7% to CN¥47.97 in the past week. Revenues were in line with forecasts, at CN¥41b, although statutory earnings per share came in 19% below what the analysts expected, at CN¥4.45 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the 17 analysts covering Tianqi Lithium provided consensus estimates of CN¥29.7b revenue in 2024, which would reflect a painful 27% decline over the past 12 months. Statutory earnings per share are forecast to dip 4.5% to CN¥4.25 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CN¥22.9b and earnings per share (EPS) of CN¥5.10 in 2024. Although revenue sentiment has improved substantially, the analysts have made a real cut to per-share earnings estimates, suggesting that the growth is not without cost.
There's been no major changes to the price target of CN¥55.06, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. 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. Currently, the most bullish analyst values Tianqi Lithium at CN¥80.00 per share, while the most bearish prices it at CN¥33.00. 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.
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 27% annualised decline to the end of 2024. That is a notable change from historical growth of 57% 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 17% annually for the foreseeable future. It's pretty clear that Tianqi Lithium's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tianqi Lithium. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at CN¥55.06, with the latest estimates not enough to have an impact on their price targets.
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 Tianqi Lithium going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Tianqi Lithium has 2 warning signs we think you should be aware of.
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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.