Time To Worry? Analysts Are Downgrading Their Hoymiles Power Electronics Inc. (SHSE:688032) Outlook

The analysts covering Hoymiles Power Electronics Inc. (SHSE:688032) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. At CN¥132, shares are up 5.4% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the current consensus from Hoymiles Power Electronics' three analysts is for revenues of CN¥2.6b in 2024 which - if met - would reflect a sizeable 39% increase on its sales over the past 12 months. Per-share earnings are expected to jump 68% to CN¥4.75. Prior to this update, the analysts had been forecasting revenues of CN¥2.9b and earnings per share (EPS) of CN¥5.41 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Hoymiles Power Electronics

The consensus price target fell 8.5% to CN¥166, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. The analysts are definitely expecting Hoymiles Power Electronics' growth to accelerate, with the forecast 94% annualised growth to the end of 2024 ranking favourably alongside historical growth of 37% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Hoymiles Power Electronics is expected to grow much faster than its 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Hoymiles Power Electronics.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Hoymiles Power Electronics' financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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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.