One thing we could say about the covering analyst on Smarter Microelectronics (Guangzhou) Co., Ltd. (SHSE:688512) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following this downgrade, Smarter Microelectronics (Guangzhou)'s solitary analyst are forecasting 2024 revenues to be CN¥537m, approximately in line with the last 12 months. Losses are forecast to hold steady at around CN¥0.85 per share. Yet prior to the latest estimates, the analyst had been forecasting revenues of CN¥611m and losses of CN¥0.82 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

The analyst lifted their price target 10% to CN¥11.00, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 0.08% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 8.3% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 24% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Smarter Microelectronics (Guangzhou) is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Smarter Microelectronics (Guangzhou)'s revenues are expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. 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 Smarter Microelectronics (Guangzhou) after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Smarter Microelectronics (Guangzhou) going out as far as 2026, and you can see them free on our platform here.

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