Some Shanxi Lanhua Sci-Tech Venture Co.,Ltd (SHSE:600123) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Shanxi Lanhua Sci-Tech Venture Co.,Ltd (SHSE:600123), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the dual analysts covering Shanxi Lanhua Sci-Tech VentureLtd provided consensus estimates of CN¥12b revenue in 2024, which would reflect a discernible 5.2% decline on its sales over the past 12 months. Statutory earnings per share are supposed to drop 14% to CN¥0.84 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥14b and earnings per share (EPS) of CN¥1.91 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.

Check out our latest analysis for Shanxi Lanhua Sci-Tech VentureLtd

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.2% by the end of 2024. This indicates a significant reduction from annual growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shanxi Lanhua Sci-Tech VentureLtd is expected to lag 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, and industry data suggests that Shanxi Lanhua Sci-Tech VentureLtd's revenues are expected to grow slower than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Shanxi Lanhua Sci-Tech VentureLtd, and a few readers might choose to steer clear of the stock.

Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Shanxi Lanhua Sci-Tech VentureLtd that suggests the company could be somewhat overvalued. You can learn more about our valuation methodology for free on our platform here.

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.