One thing we could say about the analysts on China Tourism Group Duty Free Corporation Limited (SHSE:601888) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Investors however, have been notably more optimistic about China Tourism Group Duty Free recently, with the stock price up a noteworthy 11% to CN¥70.51 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

After the downgrade, the 32 analysts covering China Tourism Group Duty Free are now predicting revenues of CN¥67b in 2024. If met, this would reflect a reasonable 7.0% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to climb 17% to CN¥3.47. Previously, the analysts had been modelling revenues of CN¥76b and earnings per share (EPS) of CN¥3.76 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

The consensus price target fell 6.1% to CN¥89.85, 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. It's clear from the latest estimates that China Tourism Group Duty Free's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that China Tourism Group Duty Free is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of China Tourism Group Duty Free going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple China Tourism Group Duty Free analysts - going out to 2026, and you can see them 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 with high insider ownership.

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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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