Today is shaping up negative for CanSino Biologics Inc. (HKG:6185) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the five analysts covering CanSino Biologics are now predicting revenues of CN¥858m in 2024. If met, this would reflect a major 140% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 76% to CN¥1.42. Yet before this consensus update, the analysts had been forecasting revenues of CN¥958m and losses of CN¥1.27 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
The consensus price target fell 18% to CN¥24.32, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 CanSino Biologics, with the most bullish analyst valuing it at CN¥38.36 and the most bearish at CN¥17.09 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that CanSino Biologics' rate of growth is expected to accelerate meaningfully, with the forecast 140% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 33% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 26% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that CanSino Biologics is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of CanSino Biologics.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for CanSino Biologics going out to 2026, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.