The latest analyst coverage could presage a bad day for China Yongda Automobiles Services Holdings Limited (HKG:3669), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the 22 analysts covering China Yongda Automobiles Services Holdings are now predicting revenues of CN¥75b in 2022. If met, this would reflect a meaningful 9.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 5.5% to CN¥1.04. Previously, the analysts had been modelling revenues of CN¥85b and earnings per share (EPS) of CN¥1.24 in 2022. Indeed, we can see that the analysts are a lot more bearish about China Yongda Automobiles Services Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for China Yongda Automobiles Services Holdings

The consensus price target fell 9.8% to CN¥9.35, 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. The most optimistic China Yongda Automobiles Services Holdings analyst has a price target of CN¥21.33 per share, while the most pessimistic values it at CN¥6.50. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting China Yongda Automobiles Services Holdings' growth to accelerate, with the forecast 20% annualised growth to the end of 2022 ranking favourably alongside historical growth of 10.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that China Yongda Automobiles Services Holdings is expected to grow much faster than its industry.

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. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of China Yongda Automobiles Services Holdings.

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 China Yongda Automobiles Services Holdings 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.