One SUFA Technology Industry Co., Ltd., CNNC (SZSE:000777) Broker Just Cut Their Revenue Forecasts By 11%

Today is shaping up negative for SUFA Technology Industry Co., Ltd., CNNC (SZSE:000777) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the most recent consensus for SUFA Technology Industry CNNC from its solitary analyst is for revenues of CN¥1.9b in 2024 which, if met, would be a solid 15% increase on its sales over the past 12 months. Per-share earnings are expected to jump 21% to CN¥0.72. Prior to this update, the analyst had been forecasting revenues of CN¥2.2b and earnings per share (EPS) of CN¥0.74 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

See our latest analysis for SUFA Technology Industry CNNC

The consensus price target fell 19% to CN¥16.30, with the weaker earnings outlook clearly leading analyst valuation estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analyst is definitely expecting SUFA Technology Industry CNNC's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 8.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. SUFA Technology Industry CNNC is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for SUFA Technology Industry CNNC. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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 SUFA Technology Industry CNNC after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen for 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 backed by insiders.

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