The analyst covering China Bohai Bank Co., Ltd. (HKG:9668) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 9.8% to HK$1.34 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After this downgrade, China Bohai Bank's lone analyst is now forecasting revenues of CN¥30b in 2022. This would be a substantial 48% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be CN¥0.44, approximately in line with the last 12 months. Previously, the analyst had been modelling revenues of CN¥38b and earnings per share (EPS) of CN¥0.63 in 2022. Indeed, we can see that the analyst is a lot more bearish about China Bohai Bank's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for China Bohai Bank

The consensus price target fell 66% to CN¥1.05, with the weaker earnings outlook clearly leading analyst valuation estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analyst is definitely expecting China Bohai Bank's growth to accelerate, with the forecast 48% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.7% 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 9.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that China Bohai Bank is expected to grow much faster than its 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 China Bohai Bank. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of China Bohai Bank.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2024, which can be seen for 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.