Yahoo Finance The Zhihu Inc. (NYSE:ZH) Analysts Have Been Trimming Their Sales Forecasts
The latest analyst coverage could presage a bad day for Zhihu Inc. (NYSE:ZH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the most recent consensus for Zhihu from its twelve analysts is for revenues of CN¥4.0b in 2022 which, if met, would be a substantial 24% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CN¥4.7b of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Zhihu, given the substantial drop in revenue estimates.
View our latest analysis for Zhihu
There was no particular change to the consensus price target of CN¥27.26, with Zhihu's latest outlook seemingly not enough to result in a change of 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. There are some variant perceptions on Zhihu, with the most bullish analyst valuing it at CN¥6.38 and the most bearish at CN¥1.50 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zhihu's past performance and to peers in the same industry. We would highlight that Zhihu's revenue growth is expected to slow, with the forecast 34% annualised growth rate until the end of 2022 being well below the historical 96% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% annually. Even after the forecast slowdown in growth, it seems obvious that Zhihu is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Zhihu going forwards.
Hungry for more information? At least one of Zhihu's twelve analysts has provided estimates out to 2024, which can be seen for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.
