In This Article:
The analysts covering Noah Holdings Limited (NYSE:NOAH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the consensus from eight analysts covering Noah Holdings is for revenues of CN¥2.7b in 2024, implying a measurable 4.8% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CN¥3.1b in 2024. The consensus view seems to have become more pessimistic on Noah Holdings, noting the substantial drop in revenue estimates in this update.
Check out our latest analysis for Noah Holdings
Notably, the analysts have cut their price target 16% to CN¥93.70, suggesting concerns around Noah Holdings' valuation. 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. The most optimistic Noah Holdings analyst has a price target of CN¥173 per share, while the most pessimistic values it at CN¥64.06. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. One more thing stood out to us about these estimates, and it's the idea that Noah Holdings' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 9.4% to the end of 2024. This tops off a historical decline of 1.5% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.5% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Noah Holdings to suffer worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Noah Holdings this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Noah Holdings going forwards.