One thing we could say about the analysts on Poly Property Services Co., Ltd. (HKG:6049) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 5.0% to HK$27.05 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.

After this downgrade, Poly Property Services' 20 analysts are now forecasting revenues of CN¥17b in 2024. This would be a decent 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to grow 15% to CN¥2.87. Prior to this update, the analysts had been forecasting revenues of CN¥19b and earnings per share (EPS) of CN¥2.99 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

Analysts made no major changes to their price target of CN¥41.14, suggesting the downgrades are not expected to have a long-term impact on Poly Property Services' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Poly Property Services analyst has a price target of CN¥61.74 per share, while the most pessimistic values it at CN¥29.98. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Poly Property Services' past performance and to peers in the same industry. We would highlight that Poly Property Services' revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2024 being well below the historical 24% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.1% annually. Even after the forecast slowdown in growth, it seems obvious that Poly Property Services is also expected 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 stark change in sentiment, we'd understand if investors became more cautious on Poly Property Services after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Poly Property Services analysts - going out to 2026, and you can see them 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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