The analysts covering Yadea Group Holdings Ltd. (HKG:1585) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. The stock price has risen 6.7% to HK$10.22 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the current consensus from Yadea Group Holdings' 14 analysts is for revenues of CN¥35b in 2024 which - if met - would reflect a meaningful 8.5% increase on its sales over the past 12 months. Per-share earnings are expected to rise 6.1% to CN¥0.87. Before this latest update, the analysts had been forecasting revenues of CN¥39b and earnings per share (EPS) of CN¥1.02 in 2024. Indeed, we can see that the analysts are a lot more bearish about Yadea Group Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 11% to CN¥13.84, with the weaker earnings outlook clearly leading analyst valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Yadea Group Holdings analyst has a price target of CN¥20.14 per share, while the most pessimistic values it at CN¥7.86. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 18% growth on an annualised basis. That is in line with its 22% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So although Yadea Group Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Yadea Group Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Yadea Group Holdings analysts - going out to 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 backed by insiders.

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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.