Time To Worry? Analysts Are Downgrading Their StarPower Semiconductor Ltd. (SHSE:603290) Outlook

One thing we could say about the analysts on StarPower Semiconductor Ltd. (SHSE:603290) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from StarPower Semiconductor's 17 analysts is for revenues of CN¥4.0b in 2024 which - if met - would reflect a satisfactory 7.9% increase on its sales over the past 12 months. Statutory earnings per share are supposed to drop 15% to CN¥4.30 in the same period. Previously, the analysts had been modelling revenues of CN¥4.7b and earnings per share (EPS) of CN¥6.47 in 2024. Indeed, we can see that the analysts are a lot more bearish about StarPower Semiconductor's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for StarPower Semiconductor

Analysts made no major changes to their price target of CN¥202, suggesting the downgrades are not expected to have a long-term impact on StarPower Semiconductor's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that StarPower Semiconductor's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 37% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 23% annually. Factoring in the forecast slowdown in growth, it seems obvious that StarPower Semiconductor is also expected to grow slower than other industry participants.

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 StarPower Semiconductor. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of StarPower Semiconductor.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with StarPower Semiconductor, including concerns around earnings quality. For more information, you can click here to discover this and the 1 other flag we've identified.

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 that insiders are buying.

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