One thing we could say about the analysts on Shenzhen Crastal Technology Co.,Ltd (SZSE:300824) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 4.1% to CN¥9.79 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, Shenzhen Crastal TechnologyLtd's six analysts are now forecasting revenues of CN¥768m in 2023. This would be a reasonable 3.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 22% to CN¥0.27. Prior to this update, the analysts had been forecasting revenues of CN¥884m and earnings per share (EPS) of CN¥0.32 in 2023. Indeed, we can see that the analysts are a lot more bearish about Shenzhen Crastal TechnologyLtd's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Shenzhen Crastal TechnologyLtd
Analysts made no major changes to their price target of CN¥11.10, suggesting the downgrades are not expected to have a long-term impact on Shenzhen Crastal TechnologyLtd's valuation.
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. We would highlight that Shenzhen Crastal TechnologyLtd's revenue growth is expected to slow, with the forecast 3.5% annualised growth rate until the end of 2023 being well below the historical 8.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shenzhen Crastal TechnologyLtd.
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, and industry data suggests that Shenzhen Crastal TechnologyLtd's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Shenzhen Crastal TechnologyLtd after the downgrade.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Shenzhen Crastal TechnologyLtd going out to 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.