Some CMGE Technology Group Limited (HKG:302) Analysts Just Made A Major Cut To Next Year's Estimates

The analysts covering CMGE Technology Group Limited (HKG:302) 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 analysts have soured majorly on the business.

After this downgrade, CMGE Technology Group's three analysts are now forecasting revenues of CN¥2.6b in 2024. This would be a meaningful 11% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 54% to CN¥0.05 per share. Before this latest update, the analysts had been forecasting revenues of CN¥3.1b and earnings per share (EPS) of CN¥0.15 in 2024. There looks to have been a major change in sentiment regarding CMGE Technology Group's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for CMGE Technology Group

There was no major change to the consensus price target of CN¥2.23, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values CMGE Technology Group at CN¥2.68 per share, while the most bearish prices it at CN¥1.57. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await CMGE Technology Group shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that CMGE Technology Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 24% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.2% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 16% per year. So it looks like CMGE Technology Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest low-light for us was that the forecasts for CMGE Technology Group dropped from profits to a loss this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on CMGE Technology Group after the downgrade.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for CMGE Technology Group going out to 2026, and you can see them 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 with high insider ownership.

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.