Innovent Biologics, Inc. (HKG:1801) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

Following the upgrade, the most recent consensus for Innovent Biologics from its twelve analysts is for revenues of CN¥2.2b in 2020 which, if met, would be a major 108% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 45% to CN¥0.81. Yet before this consensus update, the analysts had been forecasting revenues of CN¥1.8b and losses of CN¥0.96 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Check out our latest analysis for Innovent Biologics

There was no major change to the consensus price target of CN¥34.33, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Innovent Biologics at CN¥42.31 per share, while the most bearish prices it at CN¥30.13. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Innovent Biologics'historical trends, as next year's 108% revenue growth is roughly in line with 105% annual revenue growth over the past three years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 36% next year. So although Innovent Biologics is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Innovent Biologics'prospects. 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 Innovent Biologics could be a good candidate for more research.