Newsflash: Guizhou Space Appliance Co., LTD (SZSE:002025) Analysts Have Been Trimming Their Revenue Forecasts

Today is shaping up negative for Guizhou Space Appliance Co., LTD (SZSE:002025) shareholders, with the analysts 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. Shares are up 5.7% to CN¥46.25 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the latest consensus from Guizhou Space Appliance's six analysts is for revenues of CN¥6.5b in 2024, which would reflect a decent 18% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 28% to CN¥1.98. Prior to this update, the analysts had been forecasting revenues of CN¥7.3b and earnings per share (EPS) of CN¥2.05 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 minor downgrade to EPS estimates to boot.

View our latest analysis for Guizhou Space Appliance

The average price target climbed 19% to CN¥67.26 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Guizhou Space Appliance's rate of growth is expected to accelerate meaningfully, with the forecast 40% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 13% 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 21% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Guizhou Space Appliance to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given the stark change in sentiment, we'd understand if investors became more cautious on Guizhou Space Appliance after today.

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 Space Appliance analysts - going out to 2026, 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 backed by insiders.

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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.