Time To Worry? Analysts Are Downgrading Their Western Superconducting Technologies Co., Ltd. (SHSE:688122) Outlook

Today is shaping up negative for Western Superconducting Technologies Co., Ltd. (SHSE:688122) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. The stock price has risen 8.2% to CN¥39.00 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After this downgrade, Western Superconducting Technologies' five analysts are now forecasting revenues of CN¥5.1b in 2024. This would be a huge 23% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 25% to CN¥1.45. Prior to this update, the analysts had been forecasting revenues of CN¥5.9b and earnings per share (EPS) of CN¥1.91 in 2024. Indeed, we can see that the analysts are a lot more bearish about Western Superconducting Technologies' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Western Superconducting Technologies

The consensus price target fell 11% to CN¥51.49, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Western Superconducting Technologies'historical trends, as the 23% annualised revenue growth to the end of 2024 is roughly in line with the 28% 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 10% per year. So although Western Superconducting Technologies is expected to maintain its revenue growth rate, it's definitely expected 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 Western Superconducting Technologies. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Western Superconducting Technologies.

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 Western Superconducting Technologies 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.