One thing we could say about the analysts on L.K. Technology Holdings Limited (HKG:558) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. The stock price has risen 7.1% to HK$3.45 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the most recent consensus for L.K. Technology Holdings from its seven analysts is for revenues of HK$6.5b in 2025 which, if met, would be a solid 11% increase on its sales over the past 12 months. Statutory earnings per share are presumed to rise 4.2% to HK$0.40. Previously, the analysts had been modelling revenues of HK$7.5b and earnings per share (EPS) of HK$0.44 in 2025. Indeed, we can see that the analysts are a lot more bearish about L.K. Technology Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 7.8% to HK$5.65, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that L.K. Technology Holdings' revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2025 being well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. Factoring in the forecast slowdown in growth, it seems obvious that L.K. Technology Holdings is also expected to grow slower than other industry participants.

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 L.K. Technology Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that L.K. Technology Holdings' revenues are expected to grow slower 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 L.K. Technology Holdings.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for L.K. Technology Holdings going out to 2027, and you can see them free on our platform here.

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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.

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