Bearish: Analysts Just Cut Their Smart Share Global Limited (NASDAQ:EM) Revenue and EPS estimates

The latest analyst coverage could presage a bad day for Smart Share Global Limited (NASDAQ:EM), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After the downgrade, the consensus from Smart Share Global's two analysts is for revenues of CN¥1.7b in 2024, which would reflect a chunky 14% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to plunge 49% to CN¥0.12 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥2.2b and earnings per share (EPS) of CN¥0.37 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for Smart Share Global

Analysts made no major changes to their price target of CN¥13.23, suggesting the downgrades are not expected to have a long-term impact on Smart Share Global's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Smart Share Global, with the most bullish analyst valuing it at CN¥19.21 and the most bearish at CN¥7.25 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. Over the past three years, revenues have declined around 15% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 25% decline in revenue until the end of 2024. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.8% per year. So while a broad number of companies are forecast to grow, unfortunately Smart Share Global is expected to see its sales affected worse than other companies in the industry.

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 Smart Share Global. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Smart Share Global after the downgrade.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

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 backed by insiders.

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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.