Revenue Downgrade: Here's What Analysts Forecast For XGD Inc. (SZSE:300130)

Market forces rained on the parade of XGD Inc. (SZSE:300130) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the most recent consensus for XGD from its three analysts is for revenues of CN¥4.4b in 2024 which, if met, would be a decent 16% increase on its sales over the past 12 months. Per-share earnings are expected to jump 29% to CN¥1.75. Before this latest update, the analysts had been forecasting revenues of CN¥5.7b and earnings per share (EPS) of CN¥1.77 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a sizeable cut to revenues and some minor tweaks to earnings numbers.

View our latest analysis for XGD

The average price target was steady at CN¥43.25 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings.

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 XGD's rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 18% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that XGD is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on XGD after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple XGD analysts - going out to 2026, and you can see them 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.