One Shaanxi Construction Machinery Co.,Ltd (SHSE:600984) Analyst Just Slashed Their 2024 Revenue Estimates

The latest analyst coverage could presage a bad day for Shaanxi Construction Machinery Co.,Ltd (SHSE:600984), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. At CN¥4.08, shares are up 8.5% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following this downgrade, Shaanxi Construction MachineryLtd's lone analyst are forecasting 2024 revenues to be CN¥2.7b, approximately in line with the last 12 months. Losses are presumed to reduce, shrinking 11% per share from last year to CN¥0.73. However, before this estimates update, the consensus had been expecting revenues of CN¥3.0b and CN¥0.67 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Shaanxi Construction MachineryLtd

The analyst lifted their price target 29% to CN¥2.70, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 1.3% annualised revenue decline to the end of 2024 is better than the historical trend, which saw revenues shrink 2.2% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 16% annually. So while a broad number of companies are forecast to grow, unfortunately Shaanxi Construction MachineryLtd is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Shaanxi Construction MachineryLtd's revenues are expected to grow slower than the wider market. There was also a nice increase in the price target, with the analyst 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 Shaanxi Construction MachineryLtd after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2026, which can be seen 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 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.