Need To Know: This Analyst Just Made A Substantial Cut To Their BOCOM International Holdings Company Limited (HKG:3329) Estimates

Market forces rained on the parade of BOCOM International Holdings Company Limited (HKG:3329) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the current consensus from BOCOM International Holdings' sole analyst is for revenues of HK$2.0b in 2022 which - if met - would reflect a sizeable 62% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 67% to HK$0.16. Before this latest update, the analyst had been forecasting revenues of HK$2.8b and earnings per share (EPS) of HK$0.49 in 2022. Indeed, we can see that the analyst is a lot more bearish about BOCOM International Holdings' prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for BOCOM International Holdings

The consensus price target fell 26% to HK$1.56, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 BOCOM International Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 62% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 13% 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 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that BOCOM International Holdings 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 BOCOM International Holdings. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will 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 BOCOM International Holdings.

That said, this analyst might have good reason to be negative on BOCOM International Holdings, given its declining profit margins. Learn more, and discover the 3 other risks we've identified, 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.