What You Need To Know About The Shinfox Energy Co., Ltd. (TWSE:6806) Analyst Downgrade Today

Today is shaping up negative for Shinfox Energy Co., Ltd. (TWSE:6806) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, Shinfox Energy's two analysts are now forecasting revenues of NT$23b in 2024. This would be a major 102% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 133% to NT$6.86. Before this latest update, the analysts had been forecasting revenues of NT$25b and earnings per share (EPS) of NT$7.60 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.

View our latest analysis for Shinfox Energy

What's most unexpected is that the consensus price target rose 9.1% to NT$145, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. It's clear from the latest estimates that Shinfox Energy's rate of growth is expected to accelerate meaningfully, with the forecast 102% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 57% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shinfox Energy is expected to grow much faster than its 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Shinfox Energy after today.

That said, the analysts might have good reason to be negative on Shinfox Energy, given concerns around earnings quality. For more information, you can click here to discover this and the 1 other risk we've identified.

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.