One Ruitai Materials Technology Co., Ltd. (SZSE:002066) Analyst Just Made A Major Cut To Next Year's Estimates

The analyst covering Ruitai Materials Technology Co., Ltd. (SZSE:002066) 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 downgrade, the most recent consensus for Ruitai Materials Technology from its lone analyst is for revenues of CN¥5.0b in 2024 which, if met, would be a notable 8.7% increase on its sales over the past 12 months. Statutory earnings per share are presumed to ascend 11% to CN¥0.35. Prior to this update, the analyst had been forecasting revenues of CN¥5.7b and earnings per share (EPS) of CN¥0.43 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a considerable drop in earnings per share numbers as well.

Check out our latest analysis for Ruitai Materials Technology

The consensus price target fell 29% to CN¥8.70, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 analyst is definitely expecting Ruitai Materials Technology's growth to accelerate, with the forecast 8.7% annualised growth to the end of 2024 ranking favourably alongside historical growth of 5.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. So it's clear that despite the acceleration in growth, Ruitai Materials Technology is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Ruitai Materials Technology. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Ruitai Materials Technology's revenues are expected to grow slower 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.

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 2026, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.