Shenzhen Xinyichang Technology Co., Ltd. (SHSE:688383) Analysts Are More Bearish Than They Used To Be

Market forces rained on the parade of Shenzhen Xinyichang Technology Co., Ltd. (SHSE:688383) 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. Shares are up 8.3% to CN¥65.73 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the most recent consensus for Shenzhen Xinyichang Technology from its three analysts is for revenues of CN¥1.3b in 2024 which, if met, would be a sizeable 39% increase on its sales over the past 12 months. Per-share earnings are expected to leap 495% to CN¥1.81. Before this latest update, the analysts had been forecasting revenues of CN¥1.6b and earnings per share (EPS) of CN¥2.75 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Shenzhen Xinyichang Technology

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Shenzhen Xinyichang Technology's rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.3% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 23% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shenzhen Xinyichang Technology to grow faster than the wider industry.

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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Shenzhen Xinyichang Technology, and we wouldn't blame shareholders for feeling a little more cautious themselves.

That said, the analysts might have good reason to be negative on Shenzhen Xinyichang Technology, given its declining profit margins. For more information, you can click here to discover this and the 2 other risks 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.