Analysts Are More Bearish On Shenzhen Tagen Group Co., Ltd. (SZSE:000090) Than They Used To Be

Today is shaping up negative for Shenzhen Tagen Group Co., Ltd. (SZSE:000090) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After this downgrade, Shenzhen Tagen Group's three analysts are now forecasting revenues of CN¥28b in 2024. This would be a satisfactory 4.3% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to decrease 7.2% to CN¥0.75 in the same period. Previously, the analysts had been modelling revenues of CN¥33b and earnings per share (EPS) of CN¥1.01 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Shenzhen Tagen Group

The consensus price target fell 23% to CN¥5.44, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 pretty clear that there is an expectation that Shenzhen Tagen Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.3% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shenzhen Tagen Group.

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 Shenzhen Tagen Group. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Shenzhen Tagen Group's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Shenzhen Tagen Group's mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about Shenzhen Tagen Group's balance sheet by visiting our risks dashboard for free on our platform here.

You can also see our analysis of Shenzhen Tagen Group's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.