Today is shaping up negative for Shanghai INT Medical Instruments Co., Ltd. (HKG:1501) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Shanghai INT Medical Instruments' solitary analyst is for revenues of CN¥979m in 2024 which - if met - would reflect a major 30% increase on its sales over the past 12 months. Per-share earnings are expected to surge 34% to CN¥1.16. Prior to this update, the analyst had been forecasting revenues of CN¥1.2b and earnings per share (EPS) of CN¥1.36 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

The analyst made no major changes to their price target of CN¥32.25, suggesting the downgrades are not expected to have a long-term impact on Shanghai INT Medical Instruments' valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai INT Medical Instruments' past performance and to peers in the same industry. It's clear from the latest estimates that Shanghai INT Medical Instruments' rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 24% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Shanghai INT Medical Instruments is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shanghai INT Medical Instruments. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 Shanghai INT Medical Instruments after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2026, which can be seen for 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.