The latest analyst coverage could presage a bad day for Shanghai Flyco Electrical Appliance Co., Ltd. (SHSE:603868), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 9.1% to CN¥50.70 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After the downgrade, the nine analysts covering Shanghai Flyco Electrical Appliance are now predicting revenues of CN¥5.7b in 2024. If met, this would reflect a meaningful 12% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to expand 16% to CN¥2.71. Prior to this update, the analysts had been forecasting revenues of CN¥6.4b and earnings per share (EPS) of CN¥2.89 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

The consensus price target fell 18% to CN¥61.98, 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 Shanghai Flyco Electrical Appliance's past performance and to peers in the same industry. It's clear from the latest estimates that Shanghai Flyco Electrical Appliance's rate of growth is expected to accelerate meaningfully, with the forecast 12% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 15% annually. So it's clear that despite the acceleration in growth, Shanghai Flyco Electrical Appliance is expected to grow meaningfully slower than the industry average.

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 Shanghai Flyco Electrical Appliance. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Shanghai Flyco Electrical Appliance's revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Shanghai Flyco Electrical Appliance's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Shanghai Flyco Electrical Appliance after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Shanghai Flyco Electrical Appliance going out to 2026, and you can see them 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.