The analysts covering Chengdu Guibao Science & Technology Co.,Ltd. (SZSE:300019) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. At CN¥13.13, shares are up 5.3% in the past 7 days. 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.
Following the downgrade, the latest consensus from Chengdu Guibao Science & TechnologyLtd's six analysts is for revenues of CN¥3.1b in 2024, which would reflect a notable 18% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to expand 18% to CN¥0.95. Before this latest update, the analysts had been forecasting revenues of CN¥3.8b and earnings per share (EPS) of CN¥1.09 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a considerable drop in earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 5.9% to CN¥19.70.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chengdu Guibao Science & TechnologyLtd's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Chengdu Guibao Science & TechnologyLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 18% growth on an annualised basis. This is compared to a historical growth rate of 25% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% annually. So it's pretty clear that, while Chengdu Guibao Science & TechnologyLtd's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Chengdu Guibao Science & TechnologyLtd.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Chengdu Guibao Science & TechnologyLtd going out to 2025, and you can see them 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.