Analysts Just Shaved Their Shenzhen Sunway Communication Co., Ltd. (SZSE:300136) Forecasts Dramatically

Market forces rained on the parade of Shenzhen Sunway Communication Co., Ltd. (SZSE:300136) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. At CN¥18.66, shares are up 5.8% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the most recent consensus for Shenzhen Sunway Communication from its dual analysts is for revenues of CN¥8.6b in 2024 which, if met, would be a solid 12% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 30% to CN¥0.71. Before this latest update, the analysts had been forecasting revenues of CN¥10b and earnings per share (EPS) of CN¥1.02 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Shenzhen Sunway Communication

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shenzhen Sunway Communication's past performance and to peers in the same industry. It's clear from the latest estimates that Shenzhen Sunway Communication's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 22% per year. So it's clear that despite the acceleration in growth, Shenzhen Sunway Communication is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Shenzhen Sunway Communication, and a few readers might choose to steer clear of the stock.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen 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.