One thing we could say about the analysts on Zoomlion Heavy Industry Science and Technology Co., Ltd. (SZSE:000157) - 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.

Following the latest downgrade, Zoomlion Heavy Industry Science and Technology's 13 analysts currently expect revenues in 2022 to be CN¥46b, approximately in line with the last 12 months. Per-share earnings are expected to soar 26% to CN¥0.46. Previously, the analysts had been modelling revenues of CN¥65b and earnings per share (EPS) of CN¥0.65 in 2022. Indeed, we can see that the analysts are a lot more bearish about Zoomlion Heavy Industry Science and Technology's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Zoomlion Heavy Industry Science and Technology

Despite the cuts to forecast earnings, there was no real change to the CN¥6.24 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Zoomlion Heavy Industry Science and Technology at CN¥8.00 per share, while the most bearish prices it at CN¥4.80. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Zoomlion Heavy Industry Science and Technology shareholders.

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. We would highlight that Zoomlion Heavy Industry Science and Technology's revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2022 being well below the historical 25% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 22% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Zoomlion Heavy Industry Science and Technology.

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, and industry data suggests that Zoomlion Heavy Industry Science and Technology's revenues are expected to grow slower 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 Zoomlion Heavy Industry Science and Technology after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Zoomlion Heavy Industry Science and Technology analysts - 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.