Today is shaping up negative for Lanzhou LS Heavy Equipment Co., Ltd (SHSE:603169) 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.

After the downgrade, the solo analyst covering Lanzhou LS Heavy Equipment is now predicting revenues of CN¥6.0b in 2024. If met, this would reflect a decent 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 56% to CN¥0.13. Previously, the analyst had been modelling revenues of CN¥6.7b and earnings per share (EPS) of CN¥0.18 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analyst has cut their price target 17% to CN¥5.00.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Lanzhou LS Heavy Equipment's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 15% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 16% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Lanzhou LS Heavy Equipment.

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 Lanzhou LS Heavy Equipment. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Lanzhou LS Heavy Equipment's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Lanzhou LS Heavy Equipment.

As you can see, this broker clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with Lanzhou LS Heavy Equipment's financials, such as its declining profit margins. Learn more, and discover the 2 other flags we've identified, for 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.