This Great Microwave Technology Co., Ltd. (SHSE:688270) Analyst Is Way More Bearish Than They Used To Be

Today is shaping up negative for Great Microwave Technology Co., Ltd. (SHSE:688270) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously. At CN¥40.70, shares are up 6.9% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

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Following the downgrade, the current consensus from Great Microwave Technology's solitary analyst is for revenues of CN¥469m in 2025 which - if met - would reflect a major 55% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 739% to CN¥0.70. Prior to this update, the analyst had been forecasting revenues of CN¥531m and earnings per share (EPS) of CN¥0.86 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a considerable drop in earnings per share numbers as well.

Check out our latest analysis for Great Microwave Technology

Despite the cuts to forecast earnings, there was no real change to the CN¥44.80 price target, showing that the analyst don't think the changes have a meaningful impact on its intrinsic value.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Great Microwave Technology's rate of growth is expected to accelerate meaningfully, with the forecast 55% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 20% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 24% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Great Microwave Technology to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 Great Microwave Technology.

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

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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.