News Flash: 6 Analysts Think POCO Holding Co., Ltd. (SZSE:300811) Earnings Are Under Threat

The latest analyst coverage could presage a bad day for POCO Holding Co., Ltd. (SZSE:300811), 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. At CN¥57.70, shares are up 6.4% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the six analysts covering POCO Holding are now predicting revenues of CN¥1.6b in 2024. If met, this would reflect a substantial 34% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 36% to CN¥1.74. Previously, the analysts had been modelling revenues of CN¥1.9b and earnings per share (EPS) of CN¥1.95 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for POCO Holding

What's most unexpected is that the consensus price target rose 25% to CN¥60.00, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that POCO Holding's rate of growth is expected to accelerate meaningfully, with the forecast 34% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 28% 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 17% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect POCO Holding to grow faster than the wider industry.

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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

Uncomfortably, our automated valuation tool also suggests that POCO Holding stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. Find out why, and see how we estimate the valuation 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.