Today is shaping up negative for Shanghai General Healthy Information and Technology Co., Ltd. (SHSE:605186) 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.

Following the downgrade, the most recent consensus for Shanghai General Healthy Information and Technology from its dual analysts is for revenues of CN¥422m in 2024 which, if met, would be a huge 50% increase on its sales over the past 12 months. Per-share earnings are expected to leap 129% to CN¥0.93. Previously, the analysts had been modelling revenues of CN¥609m and earnings per share (EPS) of CN¥1.54 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

The consensus price target fell 12% to CN¥40.18, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 thing stands out from these estimates, which is that Shanghai General Healthy Information and Technology is forecast to grow faster in the future than it has in the past, with revenues expected to display 50% annualised growth until the end of 2024. If achieved, this would be a much better result than the 8.8% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 20% annually. Not only are Shanghai General Healthy Information and Technology's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shanghai General Healthy Information and Technology. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will 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 Shanghai General Healthy Information and Technology.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2026, which can be seen for 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.