These Analysts Just Made A Huge Downgrade To Their Zhejiang Chengchang Technology Co., Ltd. (SZSE:001270) EPS Forecasts

Market forces rained on the parade of Zhejiang Chengchang Technology Co., Ltd. (SZSE:001270) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. At CN¥56.56, shares are up 8.1% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the latest consensus from Zhejiang Chengchang Technology's six analysts is for revenues of CN¥425m in 2024, which would reflect a sizeable 48% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 72% to CN¥0.88. Prior to this update, the analysts had been forecasting revenues of CN¥587m and earnings per share (EPS) of CN¥1.57 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for Zhejiang Chengchang Technology

The consensus price target fell 33% to CN¥68.50, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 Zhejiang Chengchang Technology's rate of growth is expected to accelerate meaningfully, with the forecast 48% annualised revenue growth to the end of 2024 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 23% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Zhejiang Chengchang Technology is expected to grow much faster than its 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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 Zhejiang Chengchang Technology's business, like concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.