The analysts covering DongHua Testing Technology Co. , Ltd. (SZSE:300354) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the current consensus from DongHua Testing Technology's three analysts is for revenues of CN¥679m in 2024 which - if met - would reflect a sizeable 59% increase on its sales over the past 12 months. Per-share earnings are expected to leap 45% to CN¥1.47. Prior to this update, the analysts had been forecasting revenues of CN¥783m and earnings per share (EPS) of CN¥1.83 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to CN¥47.04.

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. The analysts are definitely expecting DongHua Testing Technology's growth to accelerate, with the forecast 59% annualised growth to the end of 2024 ranking favourably alongside historical growth of 24% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect DongHua Testing Technology to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for DongHua Testing Technology. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of DongHua Testing Technology.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with DongHua Testing Technology's financials, such as concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for 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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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.