This Broker Just Slashed Their Caina Technology Co., Ltd. (SZSE:301122) Earnings Forecasts

The analyst covering Caina Technology Co., Ltd. (SZSE:301122) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the latest downgrade, the current consensus, from the one analyst covering Caina Technology, is for revenues of CN¥361m in 2024, which would reflect a considerable 16% reduction in Caina Technology's sales over the past 12 months. Statutory earnings per share are supposed to plummet 28% to CN¥0.56 in the same period. Before this latest update, the analyst had been forecasting revenues of CN¥571m and earnings per share (EPS) of CN¥1.64 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Caina Technology

It'll come as no surprise then, to learn that the analyst has cut their price target 59% to CN¥18.62.

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. One more thing stood out to us about these estimates, and it's the idea that Caina Technology's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 16% to the end of 2024. This tops off a historical decline of 1.7% a year over the past three years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 19% annually. So it's pretty clear that, while it does have declining revenues, the analyst also expect Caina Technology to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Caina Technology.

There might be good reason for analyst bearishness towards Caina Technology, like concerns around earnings quality. For more information, you can click here to discover this and the 1 other flag we've identified.

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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.