Analysts Just Shaved Their Guo Tai Epoint Software Co.,Ltd (SHSE:688232) Forecasts Dramatically

The latest analyst coverage could presage a bad day for Guo Tai Epoint Software Co.,Ltd (SHSE:688232), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, Guo Tai Epoint SoftwareLtd's five analysts currently expect revenues in 2024 to be CN¥2.5b, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 32% to CN¥0.78. Before this latest update, the analysts had been forecasting revenues of CN¥3.1b and earnings per share (EPS) of CN¥1.85 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Guo Tai Epoint SoftwareLtd

The consensus price target fell 27% to CN¥36.01, with the weaker earnings outlook clearly leading analyst valuation estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Guo Tai Epoint SoftwareLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.8% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 21% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Guo Tai Epoint SoftwareLtd.

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 Guo Tai Epoint SoftwareLtd. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Guo Tai Epoint SoftwareLtd'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.

That said, the analysts might have good reason to be negative on Guo Tai Epoint SoftwareLtd, given concerns around earnings quality. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

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.