The analysts covering Pony Testing Co., Ltd. (SZSE:300887) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, Pony Testing's seven analysts are now forecasting revenues of CN¥2.8b in 2024. This would be a major 24% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CN¥3.2b in 2024. It looks like forecasts have become a fair bit less optimistic on Pony Testing, given the measurable cut to revenue estimates.

There was no particular change to the consensus price target of CN¥12.39, with Pony Testing's latest outlook seemingly not enough to result in a change of valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Pony Testing's growth to accelerate, with the forecast 33% annualised growth to the end of 2024 ranking favourably alongside historical growth of 17% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Pony Testing is expected to grow much faster than its industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Pony Testing this year. They're also forecasting more rapid revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Pony Testing going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Pony Testing's financials, such as its declining profit margins. Learn more, and discover the 2 other risks we've identified, 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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