This Analyst Just Downgraded Their SINOTECH Company Limited (SHSE:688737) EPS Forecasts

Market forces rained on the parade of SINOTECH Company Limited (SHSE:688737) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

After the downgrade, the lone analyst covering SINOTECH is now predicting revenues of CN¥1.7b in 2024. If met, this would reflect a modest 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 63% to CN¥0.37. Previously, the analyst had been modelling revenues of CN¥2.5b and earnings per share (EPS) of CN¥0.88 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for SINOTECH

It'll come as no surprise then, to learn that the analyst has cut their price target 41% to CN¥15.57.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that SINOTECH's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.9% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. Factoring in the forecast slowdown in growth, it seems obvious that SINOTECH is also expected to grow slower than other industry participants.

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. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that SINOTECH's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of SINOTECH.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen 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.

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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.