EHang Holdings Limited (NASDAQ:EH) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Investor sentiment seems to be improving too, with the share price up 4.0% to CN¥12.12 over the past 7 days. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
Following the upgrade, the most recent consensus for EHang Holdings from its twin analysts is for revenues of CN¥478m in 2020 which, if met, would be a substantial 267% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of CN¥0.88 per share this year. Before this latest update, the analysts had been forecasting revenues of CN¥388m and earnings per share (EPS) of CN¥0.67 in 2020. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of CN¥99.97, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on EHang Holdings, with the most bullish analyst valuing it at CN¥14.02 and the most bearish at CN¥14.00 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting EHang Holdings' growth to accelerate, with the forecast 267% growth ranking favourably alongside historical growth of 125% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect EHang Holdings to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So EHang Holdings could be a good candidate for more research.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for EHang Holdings going out as far as 2022, 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. 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. Thank you for reading.