Some Analysts Just Cut Their BC Technology Group Limited (HKG:863) Estimates

The analysts covering BC Technology Group Limited (HKG:863) 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 downgrade, the current consensus from BC Technology Group's dual analysts is for revenues of HK$331m in 2023 which - if met - would reflect a substantial 186% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of HK$631m in 2023. It looks like forecasts have become a fair bit less optimistic on BC Technology Group, given the sizeable cut to revenue estimates.

Check out our latest analysis for BC Technology Group

Notably, the analysts have cut their price target 18% to CN¥6.12, suggesting concerns around BC Technology Group's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic BC Technology Group analyst has a price target of CN¥13.46 per share, while the most pessimistic values it at CN¥3.30. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BC Technology Group's past performance and to peers in the same industry. It's clear from the latest estimates that BC Technology Group's rate of growth is expected to accelerate meaningfully, with the forecast 186% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 7.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that BC Technology Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth 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 BC Technology Group after today.

Thirsting for more data? At least one of BC Technology Group's dual analysts has provided estimates out to 2025, 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 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.