The analysts covering Sichuan Jiuyuan Yinhai Software.Co.,Ltd (SZSE:002777) 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 analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the dual analysts covering Sichuan Jiuyuan Yinhai Software.Co.Ltd are now predicting revenues of CN¥1.6b in 2024. If met, this would reflect a notable 20% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 31% to CN¥0.54. Prior to this update, the analysts had been forecasting revenues of CN¥1.8b and earnings per share (EPS) of CN¥0.70 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.

What's most unexpected is that the consensus price target rose 7.4% to CN¥32.08, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Sichuan Jiuyuan Yinhai Software.Co.Ltd's rate of growth is expected to accelerate meaningfully, with the forecast 20% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 9.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sichuan Jiuyuan Yinhai Software.Co.Ltd 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 Sichuan Jiuyuan Yinhai Software.Co.Ltd. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Sichuan Jiuyuan Yinhai Software.Co.Ltd.

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 Sichuan Jiuyuan Yinhai Software.Co.Ltd going out as far as 2026, 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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