The analysts covering Guizhou Aviation Technical Development Co., Ltd (SHSE:688239) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Shares are up 5.0% to CN¥28.84 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After this downgrade, Guizhou Aviation Technical Development's five analysts are now forecasting revenues of CN¥2.2b in 2024. This would be a credible 5.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 59% to CN¥2.05. Before this latest update, the analysts had been forecasting revenues of CN¥2.6b and earnings per share (EPS) of CN¥2.15 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Guizhou Aviation Technical Development's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 38% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 21% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Guizhou Aviation Technical Development.

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, and industry data suggests that Guizhou Aviation Technical Development's revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Guizhou Aviation Technical Development after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Guizhou Aviation Technical Development 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.