These Analysts Just Made A Huge Downgrade To Their Qingdao Gaoce Technology Co., Ltd (SHSE:688556) EPS Forecasts

One thing we could say about the analysts on Qingdao Gaoce Technology Co., Ltd (SHSE:688556) - 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 the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the seven analysts covering Qingdao Gaoce Technology provided consensus estimates of CN¥5.5b revenue in 2024, which would reflect a definite 12% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plummet 58% to CN¥0.79 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥6.3b and earnings per share (EPS) of CN¥2.04 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.

View our latest analysis for Qingdao Gaoce Technology

It'll come as no surprise then, to learn that the analysts have cut their price target 43% to CN¥12.92.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 23% by the end of 2024. This indicates a significant reduction from annual growth of 50% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 22% per year. It's pretty clear that Qingdao Gaoce Technology's revenues are expected to perform substantially worse than 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. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Qingdao Gaoce Technology's business, like concerns around earnings quality. 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.