Time To Worry? Analysts Just Downgraded Their Guizhou Zhenhua E-chem Inc. (SHSE:688707) Outlook

One thing we could say about the analysts on Guizhou Zhenhua E-chem Inc. (SHSE:688707) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Bidders are definitely seeing a different story, with the stock price of CN¥12.97 reflecting a 11% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the latest consensus from Guizhou Zhenhua E-chem's dual analysts is for revenues of CN¥4.0b in 2025, which would reflect a major 101% improvement in sales compared to the last 12 months. Losses are supposed to balloon 64% to CN¥1.70 per share. Yet before this consensus update, the analysts had been forecasting revenues of CN¥5.2b and losses of CN¥1.70 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

Check out our latest analysis for Guizhou Zhenhua E-chem

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. It's clear from the latest estimates that Guizhou Zhenhua E-chem's rate of growth is expected to accelerate meaningfully, with the forecast 101% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 12% 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 17% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Guizhou Zhenhua E-chem is expected to grow much faster than its industry.

The Bottom Line

Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Guizhou Zhenhua E-chem going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Guizhou Zhenhua E-chem going out as far as 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.