Investors in Shanghai Pharmaceuticals Holding Co., Ltd (SHSE:601607) had a good week, as its shares rose 3.0% to close at CN¥17.62 following the release of its annual results. Statutory earnings per share fell badly short of expectations, coming in at CN¥1.02, some 30% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at CN¥260b. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shanghai Pharmaceuticals Holding after the latest results.

Following the latest results, Shanghai Pharmaceuticals Holding's seven analysts are now forecasting revenues of CN¥289.2b in 2024. This would be a meaningful 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 26% to CN¥1.28. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥295.8b and earnings per share (EPS) of CN¥1.72 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the CN¥21.14 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on Shanghai Pharmaceuticals Holding, with the most bullish analyst valuing it at CN¥26.80 and the most bearish at CN¥12.40 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Shanghai Pharmaceuticals Holding's growth to accelerate, with the forecast 11% annualised growth to the end of 2024 ranking favourably alongside historical growth of 9.1% per annum 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 16% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Shanghai Pharmaceuticals Holding is expected to grow slower than the wider 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥21.14, 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. At Simply Wall St, we have a full range of analyst estimates for Shanghai Pharmaceuticals Holding going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Shanghai Pharmaceuticals Holding , and understanding these should be part of your investment process.

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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.