Yahoo Finance The RLX Technology Inc. (NYSE:RLX) Analysts Have Been Trimming Their Sales Forecasts
One thing we could say about the analysts on RLX Technology Inc. (NYSE:RLX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about RLX Technology recently, with the stock price up a noteworthy 19% to US$2.61 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the downgrade, the consensus from dual analysts covering RLX Technology is for revenues of CN¥3.4b in 2023, implying a disturbing 36% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CN¥4.2b of revenue in 2023. The consensus view seems to have become more pessimistic on RLX Technology, noting the measurable cut to revenue estimates in this update.
See our latest analysis for RLX Technology
There was no particular change to the consensus price target of CN¥43.15, with RLX Technology's latest outlook seemingly not enough to result in a change of valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic RLX Technology analyst has a price target of CN¥9.46 per share, while the most pessimistic values it at CN¥3.15. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 36% by the end of 2023. This indicates a significant reduction from annual growth of 30% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.8% per year. It's pretty clear that RLX Technology's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for RLX Technology this year. They're also anticipating slower revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on RLX Technology after today.
That said, the analysts might have good reason to be negative on RLX Technology, given concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for 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.
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