The analysts covering Ningbo Homelink Eco-iTech Co., Ltd. (SZSE:301193) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Ningbo Homelink Eco-iTech's three analysts are now forecasting revenues of CN¥1.7b in 2023. This would be an okay 5.0% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be CN¥0.51, approximately in line with the last 12 months. Prior to this update, the analysts had been forecasting revenues of CN¥2.0b and earnings per share (EPS) of CN¥0.76 in 2023. Indeed, we can see that the analysts are a lot more bearish about Ningbo Homelink Eco-iTech's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Ningbo Homelink Eco-iTech

It'll come as no surprise then, to learn that the analysts have cut their price target 11% to CN¥20.54.

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. It's pretty clear that there is an expectation that Ningbo Homelink Eco-iTech's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 5.0% growth on an annualised basis. This is compared to a historical growth rate of 16% 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 11% 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 Ningbo Homelink Eco-iTech.

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 Ningbo Homelink Eco-iTech. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

That said, the analysts might have good reason to be negative on Ningbo Homelink Eco-iTech, given its declining profit margins. For more information, you can click here to discover this and the 2 other flags 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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