Jiang Zhong Pharmaceutical Co.,Ltd (SHSE:600750) Analysts Just Slashed This Year's Revenue Estimates By 11%

Market forces rained on the parade of Jiang Zhong Pharmaceutical Co.,Ltd (SHSE:600750) shareholders today, when the analysts downgraded their 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.

Following the downgrade, the latest consensus from Jiang Zhong PharmaceuticalLtd's four analysts is for revenues of CN¥4.3b in 2024, which would reflect a satisfactory 3.5% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to increase 6.7% to CN¥1.28. Previously, the analysts had been modelling revenues of CN¥4.9b and earnings per share (EPS) of CN¥1.39 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for Jiang Zhong PharmaceuticalLtd

The consensus price target fell 8.6% to CN¥28.41, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Jiang Zhong PharmaceuticalLtd's revenue growth is expected to slow, with the forecast 7.1% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that Jiang Zhong PharmaceuticalLtd is also expected to grow slower than other industry participants.

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. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Jiang Zhong PharmaceuticalLtd's future valuation. 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 Jiang Zhong PharmaceuticalLtd after today.

After a downgrade like this one, it's pretty clear that previous forecasts were too optimistic. Worse, it's possible that the forecast future income could struggle to cover Jiang Zhong PharmaceuticalLtd'sdividend payments. What makes us say that? Learn more by visiting our risks dashboard on our platform here.

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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.