Time To Worry? Analysts Just Downgraded Their Shenzhen Dynanonic Co., Ltd (SZSE:300769) Outlook

The latest analyst coverage could presage a bad day for Shenzhen Dynanonic Co., Ltd (SZSE:300769), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of CN¥36.10 reflecting a 18% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the latest downgrade, the nine analysts covering Shenzhen Dynanonic provided consensus estimates of CN¥10b revenue in 2024, which would reflect a sizeable 27% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 87% to CN¥0.53. Before this latest update, the analysts had been forecasting revenues of CN¥21b 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 with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for Shenzhen Dynanonic

The consensus 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 34% by the end of 2024. This indicates a significant reduction from annual 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. It's pretty clear that Shenzhen Dynanonic'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 are expecting Shenzhen Dynanonic to become unprofitable this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Shenzhen Dynanonic'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 Shenzhen Dynanonic after the downgrade.

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 Dynanonic 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.