One thing we could say about the analysts on Yuneng Technology Co., Ltd. (SHSE:688348) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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.

After the downgrade, the three analysts covering Yuneng Technology are now predicting revenues of CN¥2.4b in 2024. If met, this would reflect a major 75% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 57% to CN¥4.03. Prior to this update, the analysts had been forecasting revenues of CN¥2.8b and earnings per share (EPS) of CN¥5.05 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

The consensus price target fell 25% to CN¥124, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yuneng Technology's past performance and to peers in the same industry. It's clear from the latest estimates that Yuneng Technology's rate of growth is expected to accelerate meaningfully, with the forecast 56% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 31% 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 19% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Yuneng Technology to grow faster 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 Yuneng Technology. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Yuneng Technology.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Yuneng Technology, including concerns around earnings quality. For more information, you can click here to discover this and the 1 other risk 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.