The analysts covering Shenzhen Capchem Technology Co., Ltd. (SZSE:300037) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. 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 6.0% to CN¥36.14 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 Capchem Technology's 13 analysts are now forecasting revenues of CN¥8.9b in 2024. This would be a solid 18% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 23% to CN¥1.65. Before this latest update, the analysts had been forecasting revenues of CN¥11b and earnings per share (EPS) of CN¥2.20 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shenzhen Capchem Technology's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 9.2% to CN¥50.47.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shenzhen Capchem Technology's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Shenzhen Capchem Technology'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 32% over the past five years. Compare this to the 484 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 17% per year. Factoring in the forecast slowdown in growth, it looks like Shenzhen Capchem Technology is forecast to grow at about the same rate as 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. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Shenzhen Capchem Technology analysts - going out to 2026, 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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