Today is shaping up negative for Shenzhen Breo Technology Co., Ltd. (SHSE:688793) 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.
After this downgrade, Shenzhen Breo Technology's six analysts are now forecasting revenues of CN¥1.4b in 2022. This would be a sizeable 23% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 381% to CN¥1.17. Before this latest update, the analysts had been forecasting revenues of CN¥1.6b and earnings per share (EPS) of CN¥1.95 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
See our latest analysis for Shenzhen Breo Technology
SHSE:688793 Earnings and Revenue Growth August 24th 2022The consensus price target fell 19% to CN¥55.94, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Shenzhen Breo Technology analyst has a price target of CN¥58.50 per share, while the most pessimistic values it at CN¥53.38. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Shenzhen Breo Technology's rate of growth is expected to accelerate meaningfully, with the forecast 32% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 6.1% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shenzhen Breo Technology to grow faster than the wider industry.
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, although our data indicates revenues are expected to 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 Shenzhen Breo Technology.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Shenzhen Breo Technology, including concerns around earnings quality. Learn more, and discover the 1 other warning sign we've identified, for 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.