Chongqing Zhifei Biological Products Co., Ltd. (SZSE:300122) Analysts Are More Bearish Than They Used To Be

The latest analyst coverage could presage a bad day for Chongqing Zhifei Biological Products Co., Ltd. (SZSE:300122), 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) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the consensus from Chongqing Zhifei Biological Products' 13 analysts is for revenues of CN¥44b in 2024, which would reflect a perceptible 6.8% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to reduce 3.0% to CN¥2.45 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥58b and earnings per share (EPS) of CN¥4.09 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Chongqing Zhifei Biological Products

Despite the cuts to forecast earnings, there was no real change to the CN¥47.40 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chongqing Zhifei Biological Products' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 13% by the end of 2024. This indicates a significant reduction from annual growth of 34% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 24% per year. It's pretty clear that Chongqing Zhifei Biological Products' revenues are expected to perform substantially worse than 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 Chongqing Zhifei Biological Products. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Chongqing Zhifei Biological Products' 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 Chongqing Zhifei Biological Products after the downgrade.

Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Chongqing Zhifei Biological Products that suggests the company could be somewhat overvalued. You can learn more about our valuation methodology for 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.