One thing we could say about the analysts on Helens International Holdings Company Limited (HKG:9869) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the twelve analysts covering Helens International Holdings are now predicting revenues of CN¥2.4b in 2022. If met, this would reflect a huge 28% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 73% to CN¥0.11. Previously, the analysts had been modelling revenues of CN¥2.8b and earnings per share (EPS) of CN¥0.076 in 2022. So we can see that the consensus has become notably more bearish on Helens International Holdings' outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for Helens International Holdings

The consensus price target was broadly unchanged at CN¥15.01, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Helens International Holdings analyst has a price target of CN¥21.89 per share, while the most pessimistic values it at CN¥12.93. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Helens International Holdings' growth to accelerate, with the forecast 63% annualised growth to the end of 2022 ranking favourably alongside historical growth of 25% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 29% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Helens International Holdings to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Helens International Holdings to become unprofitable this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Helens International Holdings after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Helens International Holdings going out to 2024, and you can see them 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.