The analysts covering Kunshan Dongwei Technology Co.,Ltd. (SHSE:688700) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. The stock price has risen 5.4% to CN¥38.39 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, Kunshan Dongwei TechnologyLtd's six analysts are now forecasting revenues of CN¥1.8b in 2024. This would be a huge 99% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 78% to CN¥1.20. Prior to this update, the analysts had been forecasting revenues of CN¥2.1b and earnings per share (EPS) of CN¥1.89 in 2024. Indeed, we can see that the analysts are a lot more bearish about Kunshan Dongwei TechnologyLtd's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 13% to CN¥62.98, with the weaker earnings outlook clearly leading analyst valuation 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. The analysts are definitely expecting Kunshan Dongwei TechnologyLtd's growth to accelerate, with the forecast 99% annualised growth to the end of 2024 ranking favourably alongside historical growth of 20% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Kunshan Dongwei TechnologyLtd to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Kunshan Dongwei TechnologyLtd.

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 Kunshan Dongwei TechnologyLtd 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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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.