Analysts Just Made A Major Revision To Their SenseTime Group Inc. (HKG:20) Revenue Forecasts

One thing we could say about the analysts on SenseTime Group Inc. (HKG:20) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the ten analysts covering SenseTime Group are now predicting revenues of CN¥4.7b in 2025. If met, this would reflect a sizeable 25% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 37% to CN¥0.073 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥5.8b and losses of CN¥0.071 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for SenseTime Group

The consensus price target was broadly unchanged at CN¥1.70, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 SenseTime Group, with the most bullish analyst valuing it at CN¥2.64 and the most bearish at CN¥1.20 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. For example, we noticed that SenseTime Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 25% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 0.9% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 22% annually. So while SenseTime Group's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at SenseTime Group. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on SenseTime Group after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple SenseTime Group analysts - going out to 2027, and you can see them free on our platform here.

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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.