Downgrade: Here's How Analysts See Ganfeng Lithium Group Co., Ltd. (SZSE:002460) Performing In The Near Term

One thing we could say about the analysts on Ganfeng Lithium Group Co., Ltd. (SZSE:002460) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. At CN¥39.62, shares are up 6.7% in the past 7 days. 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.

After the downgrade, the consensus from Ganfeng Lithium Group's 17 analysts is for revenues of CN¥26b in 2024, which would reflect a substantial 21% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to sink 17% to CN¥2.05 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥36b and earnings per share (EPS) of CN¥3.33 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for Ganfeng Lithium Group

Despite the cuts to forecast earnings, there was no real change to the CN¥43.11 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 21% by the end of 2024. This indicates a significant reduction from annual growth of 51% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 17% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ganfeng Lithium Group is expected to lag 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, and industry data suggests that Ganfeng Lithium Group's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Ganfeng Lithium Group after the downgrade.

There might be good reason for analyst bearishness towards Ganfeng Lithium Group, like concerns around earnings quality. For more information, you can click here to discover this and the 2 other warning signs we've identified.

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.

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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.