It's been a mediocre week for Piesat Information Technology Co., Ltd. (SHSE:688066) shareholders, with the stock dropping 11% to CN¥22.20 in the week since its latest annual results. It was a pretty bad result overall, with revenues coming in 43% lower than the analysts predicted. Statutory earnings correspondingly nosedived, with Piesat Information Technology reporting a loss of CN¥1.63 per share, where the analysts were expecting a profit. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Piesat Information Technology from six analysts is for revenues of CN¥2.88b in 2024. If met, it would imply a major 58% increase on its revenue over the past 12 months. Piesat Information Technology is also expected to turn profitable, with statutory earnings of CN¥0.72 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥4.19b and earnings per share (EPS) of CN¥1.77 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a pretty serious reduction to revenue estimates and a pretty serious reduction to earnings per share numbers as well.
The consensus price target fell 22% to CN¥49.87, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Piesat Information Technology, with the most bullish analyst valuing it at CN¥84.47 and the most bearish at CN¥27.54 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Piesat Information Technology's rate of growth is expected to accelerate meaningfully, with the forecast 58% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 36% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Piesat Information Technology to grow faster 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. They also downgraded Piesat Information Technology's 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 Piesat Information Technology's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Piesat Information Technology. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Piesat Information Technology analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Piesat Information Technology that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.