It's shaping up to be a tough period for Servyou Software Group Co., Ltd. (SHSE:603171), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with CN¥1.8b revenue coming in 6.6% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥0.20 missed the mark badly, arriving some 64% below what was expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Servyou Software Group from four analysts is for revenues of CN¥2.14b in 2024. If met, it would imply a solid 17% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to soar 183% to CN¥0.58. Before this earnings report, the analysts had been forecasting revenues of CN¥2.39b and earnings per share (EPS) of CN¥0.87 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 6.1% to CN¥40.96. 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. Currently, the most bullish analyst values Servyou Software Group at CN¥50.00 per share, while the most bearish prices it at CN¥34.00. 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 Servyou Software Group shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Servyou Software Group's growth to accelerate, with the forecast 17% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.4% 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 21% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Servyou Software Group 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 Servyou Software Group's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Servyou Software Group going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Servyou Software Group that we have uncovered.
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