Newsflash: Viomi Technology Co., Ltd (NASDAQ:VIOT) Analysts Have Been Trimming Their Revenue Forecasts

One thing we could say about the analysts on Viomi Technology Co., Ltd (NASDAQ:VIOT) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the latest consensus from Viomi Technology's three analysts is for revenues of CN¥6.3b in 2022, which would reflect a notable 8.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 27% to CN¥3.33. Prior to this update, the analysts had been forecasting revenues of CN¥7.3b and earnings per share (EPS) of CN¥3.64 in 2022. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a small dip in earnings per share numbers as well.

See our latest analysis for Viomi Technology

It'll come as no surprise then, to learn that the analysts have cut their price target 23% to US$6.90. 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. The most optimistic Viomi Technology analyst has a price target of US$12.50 per share, while the most pessimistic values it at US$3.20. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Viomi Technology's revenue growth is expected to slow, with the forecast 6.4% annualised growth rate until the end of 2022 being well below the historical 40% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Viomi Technology is also expected to grow slower than other industry participants.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Viomi Technology. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Viomi Technology's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Viomi Technology after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Viomi Technology going out to 2023, 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.