Downgrade: Here's How Analysts See Fujian Longking Co., Ltd. (SHSE:600388) Performing In The Near Term

The latest analyst coverage could presage a bad day for Fujian Longking Co., Ltd. (SHSE:600388), 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) forecasts went under the knife, suggesting analysts have soured majorly on the business.

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Following the downgrade, the latest consensus from Fujian Longking's four analysts is for revenues of CN¥12b in 2025, which would reflect a meaningful 16% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 37% to CN¥0.90. Before this latest update, the analysts had been forecasting revenues of CN¥15b and earnings per share (EPS) of CN¥1.17 in 2025. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Fujian Longking

Despite the cuts to forecast earnings, there was no real change to the CN¥16.97 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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 Fujian Longking's growth to accelerate, with the forecast 16% annualised growth to the end of 2025 ranking favourably alongside historical growth of 0.6% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 16% per year. Fujian Longking is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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 Fujian Longking. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Fujian Longking after the downgrade.

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 Fujian Longking analysts - going out to 2027, and you can see them free on our platform here.

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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.