Analysts Are More Bearish On Guizhou Zhenhua E-chem Inc. (SHSE:688707) Than They Used To Be

Market forces rained on the parade of Guizhou Zhenhua E-chem Inc. (SHSE:688707) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the three analysts covering Guizhou Zhenhua E-chem provided consensus estimates of CN¥6.4b revenue in 2024, which would reflect a perceptible 7.6% decline on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 212% to CN¥0.63. Before this latest update, the analysts had been forecasting revenues of CN¥13b and earnings per share (EPS) of CN¥1.97 in 2024. Indeed, we can see that the analysts are a lot more bearish about Guizhou Zhenhua E-chem's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Guizhou Zhenhua E-chem

It'll come as no surprise then, to learn that the analysts have cut their price target 7.5% to CN¥27.93.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Guizhou Zhenhua E-chem's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 7.6% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 35% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 19% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Guizhou Zhenhua E-chem is expected to lag the wider industry.

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 Guizhou Zhenhua E-chem. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Guizhou Zhenhua E-chem's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Guizhou Zhenhua E-chem.

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 Guizhou Zhenhua E-chem analysts - 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.