It's shaping up to be a tough period for iFLYTEK CO.,LTD (SZSE:002230), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. Revenues missed expectations somewhat, coming in at CN¥3.6b, but statutory earnings fell catastrophically short, with a loss of CN¥0.13 some 189% larger than what the analysts had predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 consensus forecast from iFLYTEKLTD's 21 analysts is for revenues of CN¥24.9b in 2024. This reflects a major 22% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 161% to CN¥0.47. In the lead-up to this report, the analysts had been modelling revenues of CN¥26.1b and earnings per share (EPS) of CN¥0.67 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
The consensus price target fell 5.4% to CN¥57.50, with the weaker earnings outlook clearly leading valuation estimates. 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. Currently, the most bullish analyst values iFLYTEKLTD at CN¥82.00 per share, while the most bearish prices it at CN¥38.90. 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.
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. The analysts are definitely expecting iFLYTEKLTD's growth to accelerate, with the forecast 30% annualised growth to the end of 2024 ranking favourably alongside historical growth of 18% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that iFLYTEKLTD is expected to grow much faster than its 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 iFLYTEKLTD'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 iFLYTEKLTD's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for iFLYTEKLTD going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for iFLYTEKLTD that you need to take into consideration.
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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.