One thing we could say about the analysts on Renrui Human Resources Technology Holdings Limited (HKG:6919) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the current consensus from Renrui Human Resources Technology Holdings' two analysts is for revenues of CN¥3.5b in 2020 which - if met - would reflect a substantial 52% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CN¥4.1b in 2020. It looks like forecasts have become a fair bit less optimistic on Renrui Human Resources Technology Holdings, given the measurable cut to revenue estimates.
There was no particular change to the consensus price target of HK$43.60, with Renrui Human Resources Technology Holdings' latest outlook seemingly not enough to result in a change of 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. The most optimistic Renrui Human Resources Technology Holdings analyst has a price target of HK$46.20 per share, while the most pessimistic values it at HK$41.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Renrui Human Resources Technology Holdings'growth to accelerate, with the forecast 52% growth ranking favourably alongside historical growth of 43% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Renrui Human Resources Technology Holdings to grow faster than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Renrui Human Resources Technology Holdings this year. They're also forecasting more rapid revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Renrui Human Resources Technology Holdings going forwards.
Unanswered questions? At least one of Renrui Human Resources Technology Holdings' two analysts has provided estimates out to 2021, which can be seen for free on our platform here.
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