What Does The Future Hold For Sichuan Em Technology Co., Ltd. (SHSE:601208)? These Analysts Have Been Cutting Their Estimates

The analysts covering Sichuan Em Technology Co., Ltd. (SHSE:601208) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 9.5% to CN¥8.61 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the most recent consensus for Sichuan Em Technology from its seven analysts is for revenues of CN¥4.8b in 2024 which, if met, would be a sizeable 26% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 45% to CN¥0.49. Previously, the analysts had been modelling revenues of CN¥5.3b and earnings per share (EPS) of CN¥0.54 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.

View our latest analysis for Sichuan Em Technology

It'll come as no surprise then, to learn that the analysts have cut their price target 11% to CN¥12.59.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Sichuan Em Technology's growth to accelerate, with the forecast 26% annualised growth to the end of 2024 ranking favourably alongside historical growth of 20% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sichuan Em Technology to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Sichuan Em Technology. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Sichuan Em Technology's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Sichuan Em Technology after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Sichuan Em Technology 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 that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.