The latest analyst coverage could presage a bad day for Wonders Information Co., Ltd (SZSE:300168), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the current consensus from Wonders Information's lone analyst is for revenues of CN¥2.5b in 2024 which - if met - would reflect a notable 16% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 72% to CN¥0.21. Prior to this update, the analyst had been forecasting revenues of CN¥4.7b and earnings per share (EPS) of CN¥0.18 in 2024. There looks to have been a major change in sentiment regarding Wonders Information's prospects, with a pretty serious reduction to revenues and the analyst now forecasting a loss instead of a profit.

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. It's clear from the latest estimates that Wonders Information's rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.7% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 18% per year. Wonders Information is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that the analyst is expecting Wonders Information to become unprofitable this year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like the analyst has become a lot more bearish on Wonders Information, and their negativity could be grounds for caution.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Wonders Information going out as far as 2026, 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 with high insider ownership.

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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.

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