OneConnect Financial Technology Co., Ltd. (NYSE: OCFT) just reported profits and analysts have lowered their price target
As you may know, OneConnect Financial Technology Co., Ltd. (NYSE: OCFT) recently reported its quarterly results. Revenue of CNY 820 million missed forecast by 14%, but at least statutory losses were much smaller than expected, with losses per share of CNY 0.85, 21% lower than analysts’ forecasts. The outcome is an important time for investors as they can track a company’s performance, review analysts’ predictions for the next year, and see if sentiment toward the company has changed. Readers will be happy to know that we’ve rounded up the latest legal guidance to see if analysts have changed their minds about OneConnect Financial Technology following the latest results.
Check out our latest analysis for OneConnect Financial Technology
NYSE: OCFT earnings and revenue growth May 14, 2021
According to the latest results, the eight analysts are now forecasting sales of CNY 4.75 billion for OneConnect Financial Technology in 2021. If that were achieved, it would mean a significant increase in sales of 34% compared to the last 12 months. Losses are expected to decrease 5.1% to CN ¥ 3.02 per share. Prior to this earnings release, the analysts had modeled sales of CNY 4.76 billion and losses of CNY 3.21 per share in 2021. It seems sentiment has risen slightly in recent updates, with analysts becoming a little more optimistic on their Loss-per-Share projections, although sales numbers remained unchanged.
Despite the lower projected losses, analysts lowered their ratings, with the average price target falling 7.0% to $ 22.76. It looks like analysts have become less optimistic about the overall business. The consensus price target is just an average of the individual analyst targets. Therefore, it can be helpful to see how wide the range of underlying estimates is. The most optimistic OneConnect Financial Technology analyst has a price target of $ 30.00 per share, while the most pessimistic is $ 19.00. This shows that the estimates are still different, but analysts don’t seem completely split on the stock, as if it could be a success or failure situation.
Now, looking at the bigger picture, one of the ways we can understand these projections is by seeing how they measure up against both past performance estimates and industry growth estimates. From the latest estimates, we can conclude that projections expect the historical trends of OneConnect Financial Technology to continue, as annualized revenue growth of 47% through the end of 2021 roughly matches the annualized revenue growth of 44% last year. In contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecasting revenue growth of 13% per year. So it’s pretty clear that OneConnect Financial Technology is expected to grow much faster than its industry.
The bottom line
Most importantly, the analysts have reconfirmed their estimates for loss per share for the next year. Fortunately, they also re-confirmed their sales numbers, which suggests sales are in line with expectations – and our data suggests sales are likely to grow faster than the industry as a whole. The consensus price target fell measurably, with analysts appearing unsettled by the latest results, leading to a lower estimate of the future valuation of OneConnect Financial Technology.
With that in mind, we wouldn’t be too quick to reach a conclusion on OneConnect Financial Technology. Long-term profitability is far more important than next year’s profits. We have forecasts for OneConnect Financial Technology for the year 2025, which you can see for free on our platform here.
Don’t forget that there can still be risks. For example, we identified 3 warning signs for OneConnect Financial Technology you should be aware of that.
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