Analyst Forecasts Just Became More Bearish On LUSTER LightTech Co., LTD. (SHSE:688400)

Market forces rained on the parade of LUSTER LightTech Co., LTD. (SHSE:688400) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At CN¥17.00, shares are up 7.3% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the current consensus from LUSTER LightTech's three analysts is for revenues of CN¥2.5b in 2024 which - if met - would reflect a satisfactory 3.0% increase on its sales over the past 12 months. Statutory earnings per share are presumed to grow 18% to CN¥0.40. Before this latest update, the analysts had been forecasting revenues of CN¥2.9b and earnings per share (EPS) of CN¥0.42 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

Check out our latest analysis for LUSTER LightTech

It'll come as no surprise then, to learn that the analysts have cut their price target 7.9% to CN¥15.20.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that LUSTER LightTech's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 6.1% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 11% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 18% per year. So although LUSTER LightTech's revenue growth is expected to improve, it is still expected to grow slower than the 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 LUSTER LightTech. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of LUSTER LightTech's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on LUSTER LightTech after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple LUSTER LightTech analysts - going out to 2026, and you can see them 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 backed by insiders.

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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.