One thing we could say about the analysts on OKE Precision Cutting Tools Co., Ltd. (SHSE:688308) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Shares are up 4.6% to CN¥23.22 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, OKE Precision Cutting Tools' five analysts are now forecasting revenues of CN¥1.2b in 2024. This would be a major 20% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 30% to CN¥1.34. Previously, the analysts had been modelling revenues of CN¥1.5b and earnings per share (EPS) of CN¥2.04 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

The consensus price target fell 16% to CN¥40.90, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting OKE Precision Cutting Tools' growth to accelerate, with the forecast 20% annualised growth to the end of 2024 ranking favourably alongside historical growth of 13% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that OKE Precision Cutting Tools is expected to grow at about the same rate as the wider 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 OKE Precision Cutting Tools. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of OKE Precision Cutting Tools.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple OKE Precision Cutting Tools analysts - going out to 2025, and you can see them 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 that insiders are buying.

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