Revenue Downgrade: Here's What Analysts Forecast For Shanghai Rongtai Health Technology Corporation Limited (SHSE:603579)

Today is shaping up negative for Shanghai Rongtai Health Technology Corporation Limited (SHSE:603579) 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.

Following this downgrade, Shanghai Rongtai Health Technology's two analysts are forecasting 2024 revenues to be CN¥1.8b, approximately in line with the last 12 months. Statutory earnings per share are expected to be CN¥1.20, roughly flat on the last 12 months. Previously, the analysts had been modelling revenues of CN¥2.1b and earnings per share (EPS) of CN¥1.33 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.

See our latest analysis for Shanghai Rongtai Health Technology

The consensus price target fell 27% to CN¥14.52, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Rongtai Health Technology's past performance and to peers in the same industry. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast out to 2024. That would be a definite improvement, given that the past five years have seen sales shrink 3.7% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 15% per year. So it's pretty clear that, although revenues are improving, Shanghai Rongtai Health Technology is still expected to grow slower than the 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, and industry data suggests that Shanghai Rongtai Health Technology's revenues are expected to grow slower than 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. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Shanghai Rongtai Health Technology 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 Shanghai Rongtai Health Technology going out as far as 2026, and you can see them free on our platform here.

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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.