The analyst covering Semk Holdings International Limited (HKG:2250) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At HK$1.39, shares are up 8.6% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the consensus from one analyst covering Semk Holdings International is for revenues of HK$220m in 2022, implying an uncomfortable 17% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 149% to HK$0.067. Previously, the analyst had been modelling revenues of HK$342m and earnings per share (EPS) of HK$0.12 in 2022. Indeed, we can see that the analyst is a lot more bearish about Semk Holdings International's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Semk Holdings International

It'll come as no surprise then, to learn that the analyst has cut their price target 29% to HK$1.63.

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. One more thing stood out to us about these estimates, and it's the idea that Semk Holdings International's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 17% to the end of 2022. This tops off a historical decline of 2.7% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. So it's pretty clear that, while it does have declining revenues, the analyst also expect Semk Holdings International to suffer worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Semk Holdings International. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of Semk Holdings International's future valuation. 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 Semk Holdings International after today.

There might be good reason for analyst bearishness towards Semk Holdings International, like its declining profit margins. For more information, you can click here to discover this and the 1 other flag we've identified.

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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