Need To Know: The Consensus Just Cut Its Yongxing Special Materials Technology Co.,Ltd (SZSE:002756) Estimates For 2024

The analysts covering Yongxing Special Materials Technology Co.,Ltd (SZSE:002756) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Shares are up 5.5% to CN¥32.23 in the past week. 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.

Following the downgrade, the consensus from six analysts covering Yongxing Special Materials TechnologyLtd is for revenues of CN¥8.7b in 2024, implying a considerable 13% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 35% to CN¥2.79 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥9.7b and earnings per share (EPS) of CN¥3.07 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a small dip in earnings per share numbers as well.

View our latest analysis for Yongxing Special Materials TechnologyLtd

It'll come as no surprise then, to learn that the analysts have cut their price target 12% to CN¥38.38.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 25% by the end of 2024. This indicates a significant reduction from annual growth of 26% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.5% annually for the foreseeable future. It's pretty clear that Yongxing Special Materials TechnologyLtd's revenues are expected to perform substantially worse 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Yongxing Special Materials TechnologyLtd after today.

There might be good reason for analyst bearishness towards Yongxing Special Materials TechnologyLtd, like its declining profit margins. Learn more, and discover the 2 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.