17 Education & Technology Group Inc. (NASDAQ:Y...
17 Education & Technology Group Inc. ( NASDAQ:YQ ) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for 17 Education & Technology Group
Taking into account the latest results, the most recent consensus for 17 Education & Technology Group from four analysts is for revenues of CN¥2.94b in 2021 which, if met, would be a substantial 127% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 93% to CN¥8.24. Yet prior to the latest earnings, the analysts had been forecasting revenues of CN¥2.99b and losses of CN¥7.14 per share in 2021. While this year's revenue estimates held steady, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 6.2% to CN¥111 per share, with the analysts clearly concerned by ballooning losses. 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. The most optimistic 17 Education & Technology Group analyst has a price target of CN¥123.49 per share, while the most pessimistic values it at CN¥98.85. This is a narrow spread of estimates, implying either that 17 Education & Technology Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 199% growth on an annualised basis. That is in line with its 217% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 17% annually. So it's pretty clear that 17 Education & Technology Group is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of 17 Education & Technology Group's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple 17 Education & Technology Group analysts - going out to 2023, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for 17 Education & Technology Group that you need to be mindful of.