The latest analyst coverage could presage a bad day for Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the six analysts covering Zhejiang Huace Film & TV are now predicting revenues of CN¥2.4b in 2024. If met, this would reflect a huge 63% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 84% to CN¥0.21. Previously, the analysts had been modelling revenues of CN¥2.9b and earnings per share (EPS) of CN¥0.27 in 2024. Indeed, we can see that the analysts are a lot more bearish about Zhejiang Huace Film & TV's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Despite the cuts to forecast earnings, there was no real change to the CN¥6.48 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zhejiang Huace Film & TV's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Zhejiang Huace Film & TV is forecast to grow faster in the future than it has in the past, with revenues expected to display 166% annualised growth until the end of 2024. If achieved, this would be a much better result than the 12% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. Not only are Zhejiang Huace Film & TV's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than 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 Zhejiang Huace Film & TV. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Zhejiang Huace Film & TV.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Zhejiang Huace Film & TV going out to 2026, and you can see them free on our platform here.

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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.