Servyou Software Group Co., Ltd. (SHSE:603171) Analysts Are More Bearish Than They Used To Be

The analysts covering Servyou Software Group Co., Ltd. (SHSE:603171) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Servyou Software Group from its four analysts is for revenues of CN¥2.1b in 2024 which, if met, would be a decent 18% increase on its sales over the past 12 months. Per-share earnings are expected to leap 52% to CN¥0.58. Before this latest update, the analysts had been forecasting revenues of CN¥2.4b and earnings per share (EPS) of CN¥0.87 in 2024. Indeed, we can see that the analysts are a lot more bearish about Servyou Software Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Servyou Software Group

It'll come as no surprise then, to learn that the analysts have cut their price target 6.1% to CN¥40.96.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Servyou Software Group's past performance and to peers in the same industry. It's clear from the latest estimates that Servyou Software Group's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Servyou Software Group is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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 Servyou Software Group. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Servyou Software Group.

There might be good reason for analyst bearishness towards Servyou Software Group, like its declining profit margins. For more information, you can click here to discover this and the 2 other risks we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.