Today is shaping up negative for Guangdong DFP New Material Group Co., Ltd. (SHSE:601515) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the latest downgrade, the current consensus, from the solitary analyst covering Guangdong DFP New Material Group, is for revenues of CN¥2.8b in 2023, which would reflect an uncomfortable 16% reduction in Guangdong DFP New Material Group's sales over the past 12 months. Statutory earnings per share are forecast to be CN¥0.16, approximately in line with the last 12 months. Previously, the analyst had been modelling revenues of CN¥4.0b and earnings per share (EPS) of CN¥0.29 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Guangdong DFP New Material Group

Despite the cuts to forecast earnings, there was no real change to the CN¥4.80 price target, showing that the analyst don't think the changes have a meaningful impact on its intrinsic value.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 21% by the end of 2023. This indicates a significant reduction from annual growth of 4.1% 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 19% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Guangdong DFP New Material Group is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. 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 Guangdong DFP New Material Group after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Guangdong DFP New Material Group going out as far as 2024, 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.