Today is shaping up negative for Guo Tai Epoint Software Co.,Ltd (SHSE:688232) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

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Following the downgrade, the latest consensus from Guo Tai Epoint SoftwareLtd's five analysts is for revenues of CN¥2.3b in 2025, which would reflect a reasonable 6.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 38% to CN¥0.91. Previously, the analysts had been modelling revenues of CN¥2.6b and earnings per share (EPS) of CN¥1.16 in 2025. Indeed, we can see that the analysts are a lot more bearish about Guo Tai Epoint SoftwareLtd's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

What's most unexpected is that the consensus price target rose 5.5% to CN¥39.10, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Guo Tai Epoint SoftwareLtd's growth to accelerate, with the forecast 6.3% annualised growth to the end of 2025 ranking favourably alongside historical growth of 2.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 18% per year. So it's clear that despite the acceleration in growth, Guo Tai Epoint SoftwareLtd is expected to grow meaningfully slower than the industry average.

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 Guo Tai Epoint SoftwareLtd's revenues are expected to grow slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

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 Guo Tai Epoint SoftwareLtd analysts - going out to 2027, and you can see them free on our platform here.

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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.