One thing we could say about the covering analyst on Shanghai Industrial Holdings Limited (HKG:363) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the solo analyst covering Shanghai Industrial Holdings, is for revenues of HK$26b in 2024, which would reflect a considerable 13% reduction in Shanghai Industrial Holdings' sales over the past 12 months. Statutory earnings per share are forecast to be HK$2.96, approximately in line with the last 12 months. Prior to this update, the analyst had been forecasting revenues of HK$33b and earnings per share (EPS) of HK$3.23 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a pretty serious reduction to revenue estimates and a minor downgrade to earnings per share numbers as well.

The analyst made no major changes to their price target of HK$12.40, suggesting the downgrades are not expected to have a long-term impact on Shanghai Industrial Holdings' valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 13% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 0.8% 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 2.3% annually for the foreseeable future. It's pretty clear that Shanghai Industrial Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shanghai Industrial Holdings. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Shanghai Industrial Holdings' revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Shanghai Industrial Holdings going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.