Earnings Release: Here's Why Analysts Cut Their Tongcheng Travel Holdings Limited (HKG:780) Price Target To HK$24.17

There's been a notable change in appetite for Tongcheng Travel Holdings Limited (HKG:780) shares in the week since its first-quarter report, with the stock down 11% to HK$14.89. The result was positive overall - although revenues of CN¥5.0b were in line with what the analysts predicted, Tongcheng Travel Holdings surprised by delivering a statutory profit of CN¥0.33 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Following the latest results, Tongcheng Travel Holdings' 23 analysts are now forecasting revenues of CN¥21.2b in 2026. This would be a credible 5.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 31% to CN¥1.41. Before this earnings report, the analysts had been forecasting revenues of CN¥21.8b and earnings per share (EPS) of CN¥1.44 in 2026. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

View our latest analysis for Tongcheng Travel Holdings

It'll come as no surprise then, to learn that the analysts have cut their price target 8.1% to HK$24.17. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Tongcheng Travel Holdings, with the most bullish analyst valuing it at HK$30.54 and the most bearish at HK$16.52 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Tongcheng Travel Holdings' revenue growth is expected to slow, with the forecast 7.9% annualised growth rate until the end of 2026 being well below the historical 26% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.0% annually. So it's pretty clear that, while Tongcheng Travel Holdings' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Tongcheng Travel Holdings' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Tongcheng Travel Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tongcheng Travel Holdings analysts - going out to 2028, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Tongcheng Travel Holdings you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.