Ming Yuan Cloud Group Holdings Limited (HKG:909) Analysts Just Cut Their EPS Forecasts Substantially

The latest analyst coverage could presage a bad day for Ming Yuan Cloud Group Holdings Limited (HKG:909), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the current consensus from Ming Yuan Cloud Group Holdings' 13 analysts is for revenues of CN¥2.0b in 2023 which - if met - would reflect a solid 10% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 66% to CN¥0.21. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥2.3b and losses of CN¥0.15 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Ming Yuan Cloud Group Holdings

The consensus price target fell 15% to CN¥5.06, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on Ming Yuan Cloud Group Holdings, with the most bullish analyst valuing it at CN¥7.85 and the most bearish at CN¥3.80 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Ming Yuan Cloud Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 26% per year. Factoring in the forecast slowdown in growth, it seems obvious that Ming Yuan Cloud Group Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Ming Yuan Cloud Group Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Ming Yuan Cloud Group Holdings.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ming Yuan Cloud Group Holdings analysts - going out to 2025, 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 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.