Newsflash: Merida Industry Co., Ltd. (TWSE:9914) Analysts Have Been Trimming Their Revenue Forecasts

The latest analyst coverage could presage a bad day for Merida Industry Co., Ltd. (TWSE:9914), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the nine analysts covering Merida Industry, is for revenues of NT$26b in 2024, which would reflect a disturbing 21% reduction in Merida Industry's sales over the past 12 months. Per-share earnings are expected to shoot up 25% to NT$9.59. Before this latest update, the analysts had been forecasting revenues of NT$32b and earnings per share (EPS) of NT$10.18 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

See our latest analysis for Merida Industry

Despite the cuts to forecast earnings, there was no real change to the NT$219 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Merida Industry's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 21% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 7.0% 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 3.8% annually for the foreseeable future. It's pretty clear that Merida Industry's revenues are expected to perform substantially worse 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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Merida Industry's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Merida Industry after today.

There might be good reason for analyst bearishness towards Merida Industry, like the risk of cutting its dividend. For more information, you can click here to discover this and the 1 other risk we've identified.

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.