Today is shaping up negative for G-bits Network Technology (Xiamen) Co., Ltd. (SHSE:603444) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the most recent consensus for G-bits Network Technology (Xiamen) from its 15 analysts is for revenues of CN¥5.5b in 2024 which, if met, would be a solid 17% increase on its sales over the past 12 months. Statutory earnings per share are presumed to climb 20% to CN¥21.78. Previously, the analysts had been modelling revenues of CN¥6.1b and earnings per share (EPS) of CN¥24.10 in 2024. 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.

Check out our latest analysis for G-bits Network Technology (Xiamen)

It'll come as no surprise then, to learn that the analysts have cut their price target 16% to CN¥399.

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. It's pretty clear that there is an expectation that G-bits Network Technology (Xiamen)'s revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 24% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 19% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than G-bits Network Technology (Xiamen).

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 G-bits Network Technology (Xiamen). Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that G-bits Network Technology (Xiamen)'s revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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 G-bits Network Technology (Xiamen) after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple G-bits Network Technology (Xiamen) analysts - going out to 2025, 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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