The latest analyst coverage could presage a bad day for Guangzhou Sie Consulting Co., Ltd. (SZSE:300687), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the latest consensus from Guangzhou Sie Consulting's nine analysts is for revenues of CN¥2.7b in 2024, which would reflect a decent 19% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 46% to CN¥0.81. Previously, the analysts had been modelling revenues of CN¥3.1b and earnings per share (EPS) of CN¥0.88 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a small dip in earnings per share numbers as well.

Analysts made no major changes to their price target of CN¥28.59, suggesting the downgrades are not expected to have a long-term impact on Guangzhou Sie Consulting's valuation.

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. It's clear from the latest estimates that Guangzhou Sie Consulting's rate of growth is expected to accelerate meaningfully, with the forecast 26% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 22% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 22% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Guangzhou Sie Consulting is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Guangzhou Sie Consulting. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Guangzhou Sie Consulting after today.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Guangzhou Sie Consulting could now be moderately overvalued. Find out why, and see how we estimate the valuation for 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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