Revenue Downgrade: Here's What Analysts Forecast For Shijiazhuang Shangtai Technology Co., Ltd. (SZSE:001301)

Market forces rained on the parade of Shijiazhuang Shangtai Technology Co., Ltd. (SZSE:001301) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At CN¥35.72, shares are up 8.1% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After this downgrade, Shijiazhuang Shangtai Technology's twin analysts are now forecasting revenues of CN¥5.1b in 2024. This would be a solid 15% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to dip 7.7% to CN¥2.87 in the same period. Previously, the analysts had been modelling revenues of CN¥6.0b and earnings per share (EPS) of CN¥3.16 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

Check out our latest analysis for Shijiazhuang Shangtai Technology

It'll come as no surprise then, to learn that the analysts have cut their price target 12% to CN¥51.54.

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. It's pretty clear that there is an expectation that Shijiazhuang Shangtai Technology's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 36% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% annually. So it's pretty clear that, while Shijiazhuang Shangtai Technology's revenue growth is expected to slow, it's expected to grow roughly in line with the 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 Shijiazhuang Shangtai Technology. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Shijiazhuang Shangtai Technology's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Shijiazhuang Shangtai Technology after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Shijiazhuang Shangtai Technology's business, like its declining profit margins. For more information, you can click here to discover this and the 2 other concerns we've identified.

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 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.