The analysts covering Chow Tai Seng Jewellery Co., Ltd. (SZSE:002867) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Shares are up 7.4% to CN¥12.12 in 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 downgrade, the most recent consensus for Chow Tai Seng Jewellery from its eleven analysts is for revenues of CN¥17b in 2025 which, if met, would be a decent 16% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 21% to CN¥1.20. Previously, the analysts had been modelling revenues of CN¥20b and earnings per share (EPS) of CN¥1.35 in 2025. Indeed, we can see that the analysts are a lot more bearish about Chow Tai Seng Jewellery's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Despite the cuts to forecast earnings, there was no real change to the CN¥13.28 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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 Chow Tai Seng Jewellery's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2025 being well below the historical 27% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% annually. So it's pretty clear that, while Chow Tai Seng Jewellery's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Chow Tai Seng Jewellery after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Chow Tai Seng Jewellery 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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