The latest analyst coverage could presage a bad day for China Catalyst Holding Co., Ltd. (SHSE:688267), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. The stock price has risen 6.4% to CN¥19.08 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the latest downgrade, the single analyst covering China Catalyst Holding provided consensus estimates of CN¥539m revenue in 2023, which would reflect an uneasy 8.5% decline on its sales over the past 12 months. Statutory earnings per share are supposed to drop 11% to CN¥0.58 in the same period. Before this latest update, the analyst had been forecasting revenues of CN¥685m and earnings per share (EPS) of CN¥0.85 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for China Catalyst Holding

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the China Catalyst Holding's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 8.5% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 4.0% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 19% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Catalyst Holding is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that China Catalyst Holding's revenues are expected to grow slower than the wider market. Given the serious cut to this year's outlook, it's clear that the analyst has turned more bearish on China Catalyst Holding, and we wouldn't blame shareholders for feeling a little more cautious themselves.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.