Downgrade: Here's How Analysts See COFCO Joycome Foods Limited (HKG:1610) Performing In The Near Term

The analysts covering COFCO Joycome Foods Limited (HKG:1610) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Surprisingly the share price has been buoyant, rising 13% to HK$1.76 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

After the downgrade, the seven analysts covering COFCO Joycome Foods are now predicting revenues of CN¥13b in 2024. If met, this would reflect a meaningful 11% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting CN¥0.073 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of CN¥17b and earnings per share (EPS) of CN¥0.38 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for COFCO Joycome Foods

The consensus price target fell 8.0% to CN¥2.11, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic COFCO Joycome Foods analyst has a price target of CN¥2.32 per share, while the most pessimistic values it at CN¥1.57. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting COFCO Joycome Foods' growth to accelerate, with the forecast 11% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.2% per annum 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 7.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect COFCO Joycome Foods 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. While analysts 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 COFCO Joycome Foods.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for COFCO Joycome Foods going out to 2026, and you can see them 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.