Some Analysts Just Cut Their King Yuan Electronics Co., Ltd. (TWSE:2449) Estimates

The analysts covering King Yuan Electronics Co., Ltd. (TWSE:2449) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Surprisingly the share price has been buoyant, rising 15% to NT$119 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

After the downgrade, the consensus from King Yuan Electronics' ten analysts is for revenues of NT$29b in 2024, which would reflect a chunky 15% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to jump 55% to NT$7.59. Previously, the analysts had been modelling revenues of NT$33b and earnings per share (EPS) of NT$7.70 in 2024. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

See our latest analysis for King Yuan Electronics

The consensus price target rose 11% to NT$122, with the analysts apparently satisfied with the business performance despite lower revenue forecasts.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the King Yuan Electronics' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 7.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% per year. It's pretty clear that King Yuan Electronics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of King Yuan Electronics going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple King Yuan Electronics analysts - 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.

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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.