The analysts covering Baowu Magnesium Technology Co., Ltd. (SZSE:002182) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Shares are up 9.6% to CN¥19.28 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.

Following the downgrade, the most recent consensus for Baowu Magnesium Technology from its six analysts is for revenues of CN¥9.9b in 2023 which, if met, would be a substantial 31% increase on its sales over the past 12 months. Per-share earnings are expected to jump 79% to CN¥0.61. Prior to this update, the analysts had been forecasting revenues of CN¥11b and earnings per share (EPS) of CN¥0.90 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Baowu Magnesium Technology

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Baowu Magnesium Technology's past performance and to peers in the same industry. It's clear from the latest estimates that Baowu Magnesium Technology's rate of growth is expected to accelerate meaningfully, with the forecast 31% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 13% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Baowu Magnesium Technology to grow faster than 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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Baowu Magnesium Technology, and we wouldn't blame shareholders for feeling a little more cautious themselves.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Baowu Magnesium Technology, including its declining profit margins. Learn more, and discover the 3 other risks we've identified, 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.