Time To Worry? Analysts Just Downgraded Their CMGE Technology Group Limited (HKG:302) Outlook

Simply Wall St ·  08/31/2023 06:21

Today is shaping up negative for CMGE Technology Group Limited (HKG:302) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the six analysts covering CMGE Technology Group are now predicting revenues of CN¥3.7b in 2023. If met, this would reflect a major 23% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CN¥4.6b of revenue in 2023. The consensus view seems to have become more pessimistic on CMGE Technology Group, noting the substantial drop in revenue estimates in this update.

Check out our latest analysis for CMGE Technology Group

SEHK:302 Earnings and Revenue Growth August 30th 2023

Notably, the analysts have cut their price target 9.0% to CN¥2.69, suggesting concerns around CMGE Technology Group's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values CMGE Technology Group at CN¥3.68 per share, while the most bearish prices it at CN¥1.58. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that CMGE Technology Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 23% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 10.0% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 21% per year. So it looks like CMGE Technology Group is expected to grow at about the same rate as the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for CMGE Technology Group this year. They're also forecasting for revenues to grow at about the same rate as companies in the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of CMGE Technology Group going forwards.

Looking for more information? We have estimates for CMGE Technology Group from its six analysts out until 2025, and you can see them 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.

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