Hangzhou Sunrise Technology Co.,Ltd. (SZSE:300360) Analysts Are Reducing Their Forecasts For This Year

Today is shaping up negative for Hangzhou Sunrise Technology Co.,Ltd. (SZSE:300360) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. 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. The stock price has risen 9.9% to CN¥14.73 over the past week. 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 Hangzhou Sunrise TechnologyLtd's five analysts is for revenues of CN¥2.2b in 2024 which - if met - would reflect a major 23% increase on its sales over the past 12 months. Per-share earnings are expected to increase 2.3% to CN¥1.22. Prior to this update, the analysts had been forecasting revenues of CN¥2.6b and earnings per share (EPS) of CN¥1.41 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Hangzhou Sunrise TechnologyLtd

Despite the cuts to forecast earnings, there was no real change to the CN¥18.70 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. The analysts are definitely expecting Hangzhou Sunrise TechnologyLtd's growth to accelerate, with the forecast 23% annualised growth to the end of 2024 ranking favourably alongside historical growth of 17% per annum 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 18% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hangzhou Sunrise TechnologyLtd to grow faster than the wider 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 Hangzhou Sunrise TechnologyLtd. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Hangzhou Sunrise TechnologyLtd.

Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Hangzhou Sunrise TechnologyLtd that suggests the company could be somewhat overvalued. You can learn more about our valuation methodology for free on our platform here.

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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.