The analysts covering Anhui Guangxin Agrochemical Co., Ltd. (SHSE:603599) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. The stock price has risen 4.1% to CN¥10.56 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the latest downgrade, Anhui Guangxin Agrochemical's twin analysts currently expect revenues in 2024 to be CN¥5.2b, approximately in line with the last 12 months. Statutory earnings per share are forecast to be CN¥1.24, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of CN¥6.9b and earnings per share (EPS) of CN¥1.69 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.

The consensus price target fell 40% to CN¥14.29, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. We would highlight that Anhui Guangxin Agrochemical's revenue growth is expected to slow, with the forecast 1.3% annualised growth rate until the end of 2024 being well below the historical 22% 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 15% 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 Anhui Guangxin Agrochemical.

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 Anhui Guangxin Agrochemical. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Anhui Guangxin Agrochemical.

That said, the analysts might have good reason to be negative on Anhui Guangxin Agrochemical, given concerns around earnings quality. Learn more, and discover the 1 other warning sign 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.