This Analyst Just Downgraded Their Midland Holdings Limited (HKG:1200) EPS Forecasts

Today is shaping up negative for Midland Holdings Limited (HKG:1200) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. The stock price has risen 6.9% to HK$2.17 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

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Following the latest downgrade, Midland Holdings' single analyst currently expects revenues in 2025 to be HK$5.2b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 6.0% to HK$0.44. Previously, the analyst had been modelling revenues of HK$6.2b and earnings per share (EPS) of HK$0.50 in 2025. Indeed, we can see that the analyst is a lot more bearish about Midland Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Midland Holdings

The average price target climbed 143% to HK$3.01 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.0% by the end of 2025. This indicates a significant reduction from annual growth of 0.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Midland Holdings is expected to lag the wider 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 Midland Holdings. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Midland Holdings' revenues are expected to grow slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Midland Holdings going out as far as 2026, and you can see them free on our platform here.

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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.