The analysts covering Helens International Holdings Company Limited (HKG:9869) 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) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from Helens International Holdings' eight analysts is for revenues of CN¥972m in 2024 which - if met - would reflect a modest 3.4% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 103% to CN¥0.16. Prior to this update, the analysts had been forecasting revenues of CN¥1.1b and earnings per share (EPS) of CN¥0.19 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to 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 30% to CN¥2.45. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Helens International Holdings at CN¥4.15 per share, while the most bearish prices it at CN¥1.73. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Helens International Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3.4% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 17% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. Although Helens International Holdings' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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 Helens International Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Helens International Holdings' revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Helens International Holdings.

Worse yet, our risk analysis suggests that Helens International Holdings may find it hard to maintain its dividend following these downgrades. For more information, you can click here to learn more about our dividend analysis and the 1 potential warning sign we've identified.

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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.