Today is shaping up negative for Guo Tai Epoint Software Co.,Ltd (SHSE:688232) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Shares are up 6.6% to CN¥36.22 in 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.
After this downgrade, Guo Tai Epoint SoftwareLtd's five analysts are now forecasting revenues of CN¥2.8b in 2023. This would be a modest 6.7% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 60% to CN¥1.48. Previously, the analysts had been modelling revenues of CN¥3.2b and earnings per share (EPS) of CN¥1.83 in 2023. 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.
See our latest analysis for Guo Tai Epoint SoftwareLtd
It'll come as no surprise then, to learn that the analysts have cut their price target 17% to CN¥51.52.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Guo Tai Epoint SoftwareLtd's past performance and to peers in the same industry. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 6.7% growth on an annualised basis. That is in line with its 6.5% annual growth over the past three years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 24% annually. So although Guo Tai Epoint SoftwareLtd is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider 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 Guo Tai Epoint SoftwareLtd. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Guo Tai Epoint SoftwareLtd's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Guo Tai Epoint SoftwareLtd's financials, such as its declining profit margins. Learn more, and discover the 2 other concerns we've identified, for 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 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.
