Analysts Have Just Cut Their Tongling Jingda Special Magnet Wire Co., Ltd. (SHSE:600577) Revenue Estimates By 12%

The analysts covering Tongling Jingda Special Magnet Wire Co., Ltd. (SHSE:600577) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After this downgrade, Tongling Jingda Special Magnet Wire's three analysts are now forecasting revenues of CN¥20b in 2024. This would be a meaningful 9.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 27% to CN¥0.26. Before this latest update, the analysts had been forecasting revenues of CN¥22b and earnings per share (EPS) of CN¥0.27 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.

Check out our latest analysis for Tongling Jingda Special Magnet Wire

The average price target climbed 11% to CN¥4.87 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Tongling Jingda Special Magnet Wire'shistorical trends, as the 12% annualised revenue growth to the end of 2024 is roughly in line with the 11% annual revenue growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 18% annually. So although Tongling Jingda Special Magnet Wire is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.

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 Tongling Jingda Special Magnet Wire's revenues are expected to grow slower than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Tongling Jingda Special Magnet Wire after today.

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 Tongling Jingda Special Magnet Wire going out to 2025, 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.