Last week, you might have seen that Qingdao Gaoce Technology Co., Ltd (SHSE:688556) released its first-quarter result to the market. The early response was not positive, with shares down 6.9% to CN¥27.30 in the past week. Results were mixed, with revenues of CN¥1.4b exceeding expectations, even as earnings per share (EPS) came up short. Statutory earnings were CN¥0.62 per share, -15% below whatthe analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, Qingdao Gaoce Technology's ten analysts currently expect revenues in 2024 to be CN¥6.26b, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 25% to CN¥2.95 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥7.00b and earnings per share (EPS) of CN¥3.38 in 2024. Indeed, we can see that the analysts are a lot more bearish about Qingdao Gaoce Technology's prospects following the latest results, 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¥36.32 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Qingdao Gaoce Technology analyst has a price target of CN¥45.00 per share, while the most pessimistic values it at CN¥30.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 1.7% annualised decline to the end of 2024. That is a notable change from historical growth of 52% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 23% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Qingdao Gaoce Technology is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Qingdao Gaoce Technology. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Qingdao Gaoce Technology. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Qingdao Gaoce Technology going out to 2026, and you can see them free on our platform here..

You still need to take note of risks, for example - Qingdao Gaoce Technology has 3 warning signs (and 1 which is concerning) we think you should know about.

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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.