The analysts covering Topchoice Medical Co., Inc. (SHSE:600763) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. 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. Investors however, have been notably more optimistic about Topchoice Medical recently, with the stock price up an impressive 12% to CN¥60.79 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
Following the downgrade, the latest consensus from Topchoice Medical's eleven analysts is for revenues of CN¥3.2b in 2024, which would reflect a decent 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 14% to CN¥1.79. Previously, the analysts had been modelling revenues of CN¥3.5b and earnings per share (EPS) of CN¥2.35 in 2024. From this we can that analyst sentiment has definitely become more bearish after the latest update, leading to lower revenue forecasts and a pretty serious decline to earnings per share estimates.
The consensus price target fell 9.0% to CN¥80.80, with the weaker earnings outlook clearly leading analyst valuation estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Topchoice Medical's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Topchoice Medical'shistorical trends, as the 14% annualised revenue growth to the end of 2024 is roughly in line with the 11% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. So although Topchoice Medical is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Topchoice Medical.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Topchoice Medical going out to 2026, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.