The analysts covering Wuxi Lead Intelligent Equipment CO.,LTD. (SZSE:300450) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the most recent consensus for Wuxi Lead Intelligent EquipmentLTD from its 14 analysts is for revenues of CN¥19b in 2024 which, if met, would be a notable 11% increase on its sales over the past 12 months. Per-share earnings are expected to surge 29% to CN¥2.47. Prior to this update, the analysts had been forecasting revenues of CN¥23b and earnings per share (EPS) of CN¥2.60 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.
Analysts made no major changes to their price target of CN¥33.45, suggesting the downgrades are not expected to have a long-term impact on Wuxi Lead Intelligent EquipmentLTD's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Wuxi Lead Intelligent EquipmentLTD's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Wuxi Lead Intelligent EquipmentLTD's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 33% over the past five years. Compare this to the 479 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 17% per year. So it's pretty clear that, while Wuxi Lead Intelligent EquipmentLTD's revenue growth is expected to slow, it's expected to grow roughly in line with the 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 Wuxi Lead Intelligent EquipmentLTD. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Given the stark change in sentiment, we'd understand if investors became more cautious on Wuxi Lead Intelligent EquipmentLTD after today.
There might be good reason for analyst bearishness towards Wuxi Lead Intelligent EquipmentLTD, like concerns around earnings quality. Learn more, and discover the 1 other flag we've identified, 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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