Newsflash: Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the eight analysts covering Xiabuxiabu Catering Management (China) Holdings provided consensus estimates of CN¥5.2b revenue in 2024, which would reflect a discernible 5.9% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CN¥6.3b of revenue in 2024. It looks like forecasts have become a fair bit less optimistic on Xiabuxiabu Catering Management (China) Holdings, given the measurable cut to revenue estimates.

Check out our latest analysis for Xiabuxiabu Catering Management (China) Holdings

Notably, the analysts have cut their price target 14% to CN¥1.60, suggesting concerns around Xiabuxiabu Catering Management (China) Holdings' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Xiabuxiabu Catering Management (China) Holdings analyst has a price target of CN¥3.86 per share, while the most pessimistic values it at CN¥0.87. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 0.8% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 12% decline in revenue until the end of 2024. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. So while a broad number of companies are forecast to grow, unfortunately Xiabuxiabu Catering Management (China) Holdings is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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 Xiabuxiabu Catering Management (China) Holdings after today.

Thirsting for more data? At least one of Xiabuxiabu Catering Management (China) Holdings' eight analysts has provided estimates out to 2026, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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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.