Today is shaping up negative for Shenzhen Institute of Building Research Co., Ltd. (SZSE:300675) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following this downgrade, Shenzhen Institute of Building Research's sole analyst are forecasting 2024 revenues to be CN¥421m, approximately in line with the last 12 months. Per-share earnings are expected to jump 123% to CN¥0.36. Before this latest update, the analyst had been forecasting revenues of CN¥524m and earnings per share (EPS) of CN¥0.48 in 2024. Indeed, we can see that the analyst is a lot more bearish about Shenzhen Institute of Building Research's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analyst has cut their price target 21% to CN¥12.85.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Shenzhen Institute of Building Research's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.2% growth on an annualised basis. This is compared to a historical growth rate of 1.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shenzhen Institute of Building Research.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shenzhen Institute of Building Research. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Shenzhen Institute of Building Research's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Shenzhen Institute of Building Research.

There might be good reason for analyst bearishness towards Shenzhen Institute of Building Research, like its declining profit margins. Learn more, and discover the 2 other flags 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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