Shenzhen Capchem Technology Co., Ltd. (SZSE:300037) Analysts Just Cut Their EPS Forecasts Substantially

One thing we could say about the analysts on Shenzhen Capchem Technology Co., Ltd. (SZSE:300037) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 6.3% to CN¥36.14 over 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 current consensus from Shenzhen Capchem Technology's 13 analysts is for revenues of CN¥8.9b in 2024 which - if met - would reflect a notable 18% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 23% to CN¥1.65. Prior to this update, the analysts had been forecasting revenues of CN¥11b and earnings per share (EPS) of CN¥2.20 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for Shenzhen Capchem Technology

The consensus price target fell 9.2% to CN¥50.47, with the weaker earnings outlook clearly leading analyst valuation estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Shenzhen Capchem Technology's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 18% growth on an annualised basis. This is compared to a historical growth rate of 32% over the past five years. Compare this to the 484 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 16% per year. Factoring in the forecast slowdown in growth, it looks like Shenzhen Capchem Technology is forecast to grow at about the same rate as 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 Shenzhen Capchem Technology. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Shenzhen Capchem Technology.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Shenzhen Capchem Technology 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.

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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.