What Does The Future Hold For China Aerospace Times Electronics CO., LTD. (SHSE:600879)? These Analysts Have Been Cutting Their Estimates

Today is shaping up negative for China Aerospace Times Electronics CO., LTD. (SHSE:600879) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Surprisingly the share price has been buoyant, rising 11% to CN¥10.18 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

After this downgrade, China Aerospace Times Electronics' six analysts are now forecasting revenues of CN¥18b in 2024. This would be a solid 18% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 25% to CN¥0.22. Previously, the analysts had been modelling revenues of CN¥20b and earnings per share (EPS) of CN¥0.23 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for China Aerospace Times Electronics

What's most unexpected is that the consensus price target rose 7.2% to CN¥11.20, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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 China Aerospace Times Electronics' rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.3% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 25% per year. So it's clear that despite the acceleration in growth, China Aerospace Times Electronics is expected to grow meaningfully slower than the industry average.

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 China Aerospace Times Electronics. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that China Aerospace Times Electronics' revenues are expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given the stark change in sentiment, we'd understand if investors became more cautious on China Aerospace Times Electronics after today.

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 China Aerospace Times Electronics analysts - going out to 2026, and you can see them 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 with high insider ownership.

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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.