WeRide Inc. (NASDAQ:WRD) Analysts Just Trimmed Their Revenue Forecasts By 20%

Today is shaping up negative for WeRide Inc. (NASDAQ:WRD) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Investors however, have been notably more optimistic about WeRide recently, with the stock price up an impressive 14% to US$9.44 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

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Following the downgrade, the latest consensus from WeRide's three analysts is for revenues of CN¥620m in 2025, which would reflect a huge 72% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 81% to CN¥1.69 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥776m and losses of CN¥1.59 per share in 2025. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for WeRide

The consensus price target was broadly unchanged at CN¥152, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic WeRide analyst has a price target of CN¥167 per share, while the most pessimistic values it at CN¥139. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting WeRide is an easy business to forecast or the underlying assumptions are obvious.

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. It's clear from the latest estimates that WeRide's rate of growth is expected to accelerate meaningfully, with the forecast 72% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 13% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that WeRide is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at WeRide. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 WeRide after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for WeRide going out to 2027, 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 with high insider ownership.

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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.