The latest analyst coverage could presage a bad day for B-SOFT Co.,Ltd. (SZSE:300451), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the latest consensus from B-SOFTLtd's four analysts is for revenues of CN¥1.9b in 2024, which would reflect a decent 15% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 574% to CN¥0.16. Prior to this update, the analysts had been forecasting revenues of CN¥2.2b and earnings per share (EPS) of CN¥0.29 in 2024. Indeed, we can see that the analysts are a lot more bearish about B-SOFTLtd's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 18% to CN¥7.87, with the weaker earnings outlook clearly leading analyst valuation estimates.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting B-SOFTLtd's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. So it's clear that despite the acceleration in growth, B-SOFTLtd is expected to grow meaningfully slower than the industry average.
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 B-SOFTLtd's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
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 B-SOFTLtd 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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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.