Yahoo Finance Bearish: Analysts Just Cut Their RLX Technology Inc. (NYSE:RLX) Revenue and EPS estimates
The analysts covering RLX Technology Inc. (NYSE:RLX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
After this downgrade, RLX Technology's four analysts are now forecasting revenues of CN¥9.5b in 2022. This would be a notable 12% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 43% to CN¥0.86 in the same period. Previously, the analysts had been modelling revenues of CN¥11b and earnings per share (EPS) of CN¥1.12 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.
Check out our latest analysis for RLX Technology
The consensus price target fell 21% to CN¥48.32, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 RLX Technology, with the most bullish analyst valuing it at CN¥24.91 and the most bearish at CN¥1.30 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await RLX Technology shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the RLX Technology's past performance and to peers in the same industry. We would highlight that RLX Technology's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 64% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.9% annually. So it's pretty clear that, while RLX Technology's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple RLX Technology analysts - going out to 2024, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
