Time To Worry? Analysts Just Downgraded Their Shanghai MicroPort EP MedTech Co., Ltd. (SHSE:688351) Outlook

Market forces rained on the parade of Shanghai MicroPort EP MedTech Co., Ltd. (SHSE:688351) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. At CN¥20.82, shares are up 7.8% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

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After this downgrade, Shanghai MicroPort EP MedTech's seven analysts are now forecasting revenues of CN¥531m in 2025. This would be a huge 28% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 33% to CN¥0.15. Before this latest update, the analysts had been forecasting revenues of CN¥597m and earnings per share (EPS) of CN¥0.15 in 2025. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

See our latest analysis for Shanghai MicroPort EP MedTech

Analysts made no major changes to their price target of CN¥24.37, suggesting the downgrades are not expected to have a long-term impact on Shanghai MicroPort EP MedTech's valuation.

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. The analysts are definitely expecting Shanghai MicroPort EP MedTech's growth to accelerate, with the forecast 28% annualised growth to the end of 2025 ranking favourably alongside historical growth of 23% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shanghai MicroPort EP MedTech 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. 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 Shanghai MicroPort EP MedTech after today.

Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Shanghai MicroPort EP MedTech 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 with high insider ownership.

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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.