Things Look Grim For Shanghai Putailai New Energy Technology Co.,Ltd. (SHSE:603659) After Today's Downgrade

One thing we could say about the analysts on Shanghai Putailai New Energy Technology Co.,Ltd. (SHSE:603659) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Shanghai Putailai New Energy TechnologyLtd from its twelve analysts is for revenues of CN¥16b in 2024 which, if met, would be a notable 12% increase on its sales over the past 12 months. Per-share earnings are expected to jump 32% to CN¥0.91. Previously, the analysts had been modelling revenues of CN¥18b and earnings per share (EPS) of CN¥1.25 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Shanghai Putailai New Energy TechnologyLtd

The consensus price target fell 18% to CN¥17.30, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. We can infer from the latest estimates that forecasts expect a continuation of Shanghai Putailai New Energy TechnologyLtd'shistorical trends, as the 26% annualised revenue growth to the end of 2024 is roughly in line with the 29% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 15% per year. So although Shanghai Putailai New Energy TechnologyLtd is expected to maintain its revenue growth rate, it's definitely expected 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. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Shanghai Putailai New Energy TechnologyLtd's business, like its declining profit margins. Learn more, and discover the 3 other risks we've identified, for 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 backed by insiders.

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.