Downgrade: Here's How Analysts See Qingdao Gaoce Technology Co., Ltd (SHSE:688556) Performing In The Near Term

The latest analyst coverage could presage a bad day for Qingdao Gaoce Technology Co., Ltd (SHSE:688556), 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) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following this downgrade, Qingdao Gaoce Technology's ten analysts are forecasting 2024 revenues to be CN¥6.3b, approximately in line with the last 12 months. Statutory earnings per share are supposed to nosedive 25% to CN¥2.95 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥7.0b and earnings per share (EPS) of CN¥3.38 in 2024. Indeed, we can see that the analysts are a lot more bearish about Qingdao Gaoce Technology's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Qingdao Gaoce Technology

Despite the cuts to forecast earnings, there was no real change to the CN¥36.32 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 1.7% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 52% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 23% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Qingdao Gaoce Technology is expected to lag 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 Qingdao Gaoce Technology. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Qingdao Gaoce Technology's revenues are expected to grow 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 Qingdao Gaoce Technology.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Qingdao Gaoce Technology's financials, such as concerns around earnings quality. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

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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.