Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133) Analysts Just Cut Their EPS Forecasts Substantially

The latest analyst coverage could presage a bad day for Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After this downgrade, Zhejiang Huace Film & TV's six analysts are now forecasting revenues of CN¥2.4b in 2024. This would be a major 63% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 84% to CN¥0.21. Before this latest update, the analysts had been forecasting revenues of CN¥2.9b and earnings per share (EPS) of CN¥0.27 in 2024. Indeed, we can see that the analysts are a lot more bearish about Zhejiang Huace Film & TV's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Zhejiang Huace Film & TV

Analysts made no major changes to their price target of CN¥6.48, suggesting the downgrades are not expected to have a long-term impact on Zhejiang Huace Film & TV's valuation.

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. One thing stands out from these estimates, which is that Zhejiang Huace Film & TV is forecast to grow faster in the future than it has in the past, with revenues expected to display 166% annualised growth until the end of 2024. If achieved, this would be a much better result than the 12% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. So it looks like Zhejiang Huace Film & TV is expected to grow faster than its competitors, at least for a while.

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 Zhejiang Huace Film & TV. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 Zhejiang Huace Film & TV after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Zhejiang Huace Film & TV going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.