The latest analyst coverage could presage a bad day for AVIC (Chengdu)UAS Co., Ltd. (SHSE:688297), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At CN¥35.71, shares are up 6.5% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
After this downgrade, AVIC (Chengdu)UAS' twin analysts are now forecasting revenues of CN¥3.5b in 2024. This would be a huge 31% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 134% to CN¥1.05. Prior to this update, the analysts had been forecasting revenues of CN¥5.0b and earnings per share (EPS) of CN¥1.05 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a sizeable cut to revenues and some minor tweaks to earnings numbers.
The consensus price target was reduced 32% to CN¥36.03, with the lower revenue forecasts indicating negative sentiment towards AVIC (Chengdu)UAS, even though earnings forecasts were unchanged.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of AVIC (Chengdu)UAS'historical trends, as the 31% annualised revenue growth to the end of 2024 is roughly in line with the 27% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 25% per year. It's clear that while AVIC (Chengdu)UAS' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. 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 AVIC (Chengdu)UAS going forwards.
Not only have the analysts been downgrading the stock, but it looks like AVIC (Chengdu)UAS might find it hard to maintain its dividends, if these forecasts prove accurate. For more information, you can click here to learn more about our dividend analysis and the 1 potential flag we've identified.
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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