The analysts covering Sunrise Manufacture Group Co., Ltd. (SHSE:605138) 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) forecasts went under the knife, suggesting the analysts have soured majorly on the business. At CN¥6.31, shares are up 6.2% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the latest consensus from Sunrise Manufacture Group's three analysts is for revenues of CN¥5.0b in 2024, which would reflect a notable 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 381% to CN¥0.47. Previously, the analysts had been modelling revenues of CN¥6.3b and earnings per share (EPS) of CN¥0.56 in 2024. Indeed, we can see that the analysts are a lot more bearish about Sunrise Manufacture Group's prospects, administering a pretty serious reduction 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 22% to CN¥7.20.

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 Sunrise Manufacture Group's rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.1% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sunrise Manufacture Group 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 Sunrise Manufacture Group. 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. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Sunrise Manufacture Group.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Sunrise Manufacture Group's business, like the risk of cutting its dividend. Learn more, and discover the 3 other concerns we've identified, for free on our platform here.

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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