Shenzhen Dynanonic Co., Ltd (SZSE:300769) Just Reported And Analysts Have Been Cutting Their Estimates

Shareholders of Shenzhen Dynanonic Co., Ltd (SZSE:300769) will be pleased this week, given that the stock price is up 15% to CN¥36.10 following its latest quarterly results. Revenues fell badly short of expectations, with revenue of CN¥1.9b, missing analyst estimates by 68%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Shenzhen Dynanonic

After the latest results, the consensus from Shenzhen Dynanonic's nine analysts is for revenues of CN¥10.2b in 2024, which would reflect a disturbing 27% decline in revenue compared to the last year of performance. Statutory losses are forecast to balloon 87% to CN¥0.53 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥21.4b and earnings per share (EPS) of CN¥4.68 in 2024. So we can see that the consensus has become notably more bearish on Shenzhen Dynanonic's outlook following these results, with a pretty serious reduction to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.

The average price target was broadly unchanged at CN¥63.49, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Shenzhen Dynanonic, with the most bullish analyst valuing it at CN¥125 and the most bearish at CN¥26.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 34% annualised decline to the end of 2024. That is a notable change from historical growth of 59% 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 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shenzhen Dynanonic is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Shenzhen Dynanonic to become unprofitable next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Shenzhen Dynanonic going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Shenzhen Dynanonic that you should be aware of.

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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.