It's shaping up to be a tough period for Shenzhen Senior Technology Material Co., Ltd. (SZSE:300568), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥939m missed by 14%, and statutory earnings per share of CN¥0.10 fell short of forecasts by 67%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shenzhen Senior Technology Material after the latest results.
Following the latest results, Shenzhen Senior Technology Material's ten analysts are now forecasting revenues of CN¥3.88b in 2024. This would be a solid 17% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 15% to CN¥0.38. In the lead-up to this report, the analysts had been modelling revenues of CN¥4.09b and earnings per share (EPS) of CN¥0.66 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
Despite the cuts to forecast earnings, there was no real change to the CN¥11.43 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Shenzhen Senior Technology Material, with the most bullish analyst valuing it at CN¥21.00 and the most bearish at CN¥5.20 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shenzhen Senior Technology Material's past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 37% growth on an annualised basis. That is in line with its 34% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% annually. So although Shenzhen Senior Technology Material is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded Shenzhen Senior Technology Material's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at CN¥11.43, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Shenzhen Senior Technology Material. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Shenzhen Senior Technology Material going out to 2026, and you can see them free on our platform here..
It is also worth noting that we have found 4 warning signs for Shenzhen Senior Technology Material (1 is potentially serious!) that you need to take into consideration.
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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.
