The analysts covering Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Zhejiang Huace Film & TV recently, with the stock price up an impressive 26% to CN¥8.51 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

After this downgrade, Zhejiang Huace Film & TV's seven analysts are now forecasting revenues of CN¥3.1b in 2024. This would be a huge 35% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CN¥3.9b in 2024. It looks like forecasts have become a fair bit less optimistic on Zhejiang Huace Film & TV, given the pretty serious reduction to revenue estimates.

We'd point out that there was no major changes to their price target of CN¥5.97, suggesting the latest estimates were not enough to shift their view on the value of the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zhejiang Huace Film & TV's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Zhejiang Huace Film & TV is forecast to grow faster in the future than it has in the past, with revenues expected to display 50% annualised growth until the end of 2024. If achieved, this would be a much better result than the 13% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 16% annually. So it looks like Zhejiang Huace Film & TV is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster 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 Zhejiang Huace Film & TV after today.

Still got questions? We have estimates for Zhejiang Huace Film & TV from its seven analysts out until 2025, 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 that insiders are buying.

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