The latest analyst coverage could presage a bad day for New Technologies (NASDAQ: NIU), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the seven analysts covering Niu Technologies are now predicting revenues of CN ¥ 4.8b in 2022. If met, this would reflect a major 29% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to grow 10% to CN ¥ 2.89. Previously, the analysts had been modeling revenues of CN ¥ 5.6b and earnings per share (EPS) of CN ¥ 4.13 in 2022. Indeed, we can see that the analyzes are a lot more bearish about Niu Technologies’ prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
It’ll come as no surprise then, to learn that the analysts have cut their price target 17% to CN ¥ 114. 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 New Technologies, with the most bullish analyst valuing it at CN ¥ 33.93 and the most bearish at CN ¥ 10.63 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Niu Technologies is an easy business to forecast or the underlying assumptions are obvious.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It’s clear from the latest estimates that Niu Technologies’ growth rate is expected to accelerate meaningfully, with the forecast of 40% annualized revenue growth to the end of 2022 noticeably faster than its historical growth of 28% pa over the past three 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 Niu Technologies to grow faster than 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to this year’s expectations and a falling price target, we wouldn’t be surprised if investors were becoming wary of Niu Technologies.
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 Niu Technologies going out to 2024, 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.