Today is shaping up negative for BMC Medical Co., Ltd. (SZSE:301367) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. 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.
After the downgrade, the two analysts covering BMC Medical are now predicting revenues of CN¥1.2b in 2024. If met, this would reflect a huge 47% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 61% to CN¥4.82. Previously, the analysts had been modelling revenues of CN¥1.6b and earnings per share (EPS) of CN¥7.20 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 16% to CN¥121.
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. For example, we noticed that BMC Medical's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 47% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 51% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 20% per year. So it looks like BMC Medical is expected to grow faster than its competitors, at least for a while.
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 BMC Medical. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of BMC Medical.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with BMC Medical, including concerns around earnings quality. For more information, you can click here to discover this and the 1 other concern 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.