Today is shaping up negative for Cetc Potevio Science&Technology Co.,Ltd. (SZSE:002544) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the most recent consensus for Cetc Potevio Science&TechnologyLtd from its one analyst is for revenues of CN¥7.1b in 2023 which, if met, would be an okay 3.6% increase on its sales over the past 12 months. Per-share earnings are expected to step up 18% to CN¥0.27. Previously, the analyst had been modelling revenues of CN¥8.0b and earnings per share (EPS) of CN¥0.36 in 2023. Indeed, we can see that the analyst is a lot more bearish about Cetc Potevio Science&TechnologyLtd's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Cetc Potevio Science&TechnologyLtd
The analyst made no major changes to their price target of CN¥24.33, suggesting the downgrades are not expected to have a long-term impact on Cetc Potevio Science&TechnologyLtd's valuation.
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. It's clear from the latest estimates that Cetc Potevio Science&TechnologyLtd's rate of growth is expected to accelerate meaningfully, with the forecast 3.6% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 2.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 23% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Cetc Potevio Science&TechnologyLtd is expected to grow slower 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 Cetc Potevio Science&TechnologyLtd. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than 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 Cetc Potevio Science&TechnologyLtd after the downgrade.
Uncomfortably, our automated valuation tool also suggests that Cetc Potevio Science&TechnologyLtd stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. Find out why, and see how we estimate the valuation 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 that insiders are buying.
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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.