Hangzhou First Applied Material Co., Ltd. (SHSE:603806) Analysts Just Slashed This Year's Estimates

Market forces rained on the parade of Hangzhou First Applied Material Co., Ltd. (SHSE:603806) shareholders today, when the analysts downgraded their forecasts for this year. 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.

Following this downgrade, Hangzhou First Applied Material's 16 analysts are forecasting 2024 revenues to be CN¥23b, approximately in line with the last 12 months. Statutory earnings per share are forecast to be CN¥0.74, approximately in line with the last 12 months. Prior to this update, the analysts had been forecasting revenues of CN¥26b and earnings per share (EPS) of CN¥0.93 in 2024. Indeed, we can see that the analysts are a lot more bearish about Hangzhou First Applied Material's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Hangzhou First Applied Material

Despite the cuts to forecast earnings, there was no real change to the CN¥19.86 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Hangzhou First Applied Material's revenue growth is expected to slow, with the forecast 2.3% annualised growth rate until the end of 2024 being well below the historical 30% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 22% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hangzhou First Applied Material 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 Hangzhou First Applied Material. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Hangzhou First Applied Material'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 Hangzhou First Applied Material 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 Hangzhou First Applied Material 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.