The latest analyst coverage could presage a bad day for ShanDongDenghai Seeds Co.,Ltd (SZSE:002041), 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. At CN¥8.13, shares are up 6.7% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following this downgrade, ShanDongDenghai SeedsLtd's five analysts are forecasting 2024 revenues to be CN¥1.5b, approximately in line with the last 12 months. Statutory earnings per share are forecast to be CN¥0.27, approximately in line with the last 12 months. Prior to this update, the analysts had been forecasting revenues of CN¥1.7b and earnings per share (EPS) of CN¥0.33 in 2024. Indeed, we can see that the analysts are a lot more bearish about ShanDongDenghai SeedsLtd's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 21% to CN¥9.51.

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 sales are expected to reverse, with a forecast 0.7% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ShanDongDenghai SeedsLtd is expected to lag 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, and industry data suggests that ShanDongDenghai SeedsLtd's revenues are expected to grow 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 ShanDongDenghai SeedsLtd.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple ShanDongDenghai SeedsLtd 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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