Need To Know: This Analyst Just Made A Substantial Cut To Their Long Young Electronic (Kunshan) Co., Ltd. (SZSE:301389) Estimates

One thing we could say about the covering analyst on Long Young Electronic (Kunshan) Co., Ltd. (SZSE:301389) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously. At CN¥15.57, shares are up 8.3% 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 latest consensus from Long Young Electronic (Kunshan)'s sole analyst is for revenues of CN¥489m in 2024, which would reflect a huge 84% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 76% to CN¥0.60. Previously, the analyst had been modelling revenues of CN¥641m and earnings per share (EPS) of CN¥0.99 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Long Young Electronic (Kunshan)

It'll come as no surprise then, to learn that the analyst has cut their price target 17% to CN¥20.00.

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. It's clear from the latest estimates that Long Young Electronic (Kunshan)'s rate of growth is expected to accelerate meaningfully, with the forecast 84% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.9% 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 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Long Young Electronic (Kunshan) is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Long Young Electronic (Kunshan). Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Long Young Electronic (Kunshan).

That said, this broker might have good reason to be negative on Long Young Electronic (Kunshan), given the risk of cutting its dividend. For more information, you can click here to discover this and the 1 other flag we've identified.

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.