Hangzhou Changchuan Technology Co.,Ltd Just Beat Revenue By 6.7%: Here's What Analysts Think Will Happen Next

Shareholders of Hangzhou Changchuan Technology Co.,Ltd (SZSE:300604) will be pleased this week, given that the stock price is up 14% to CN¥29.29 following its latest first-quarter results. Results overall were respectable, with statutory earnings of CN¥0.07 per share roughly in line with what the analysts had forecast. Revenues of CN¥559m came in 6.7% ahead of analyst predictions. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Hangzhou Changchuan TechnologyLtd

Taking into account the latest results, the current consensus from Hangzhou Changchuan TechnologyLtd's four analysts is for revenues of CN¥3.15b in 2024. This would reflect a major 56% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 449% to CN¥0.93. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.48b and earnings per share (EPS) of CN¥1.02 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

It'll come as no surprise then, to learn that the analysts have cut their price target 21% to CN¥38.98. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Hangzhou Changchuan TechnologyLtd analyst has a price target of CN¥44.20 per share, while the most pessimistic values it at CN¥33.75. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Hangzhou Changchuan TechnologyLtd is an easy business to forecast or the the analysts are all using similar assumptions.

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. It's clear from the latest estimates that Hangzhou Changchuan TechnologyLtd's rate of growth is expected to accelerate meaningfully, with the forecast 81% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 37% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Hangzhou Changchuan TechnologyLtd is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hangzhou Changchuan TechnologyLtd. They also downgraded Hangzhou Changchuan TechnologyLtd's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Hangzhou Changchuan TechnologyLtd's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Hangzhou Changchuan TechnologyLtd. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Hangzhou Changchuan TechnologyLtd analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Hangzhou Changchuan TechnologyLtd (at least 1 which is concerning) , and understanding these should be part of your investment process.

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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.