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. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the six analysts covering Baowu Magnesium Technology are now predicting revenues of CN¥9.8b in 2024. If met, this would reflect a huge 25% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 151% to CN¥1.12. Previously, the analysts had been modelling revenues of CN¥13b and earnings per share (EPS) of CN¥1.28 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a considerable drop in earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 13% to CN¥21.94.

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. The analysts are definitely expecting Baowu Magnesium Technology's growth to accelerate, with the forecast 25% annualised growth to the end of 2024 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.7% annually. 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 biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Baowu Magnesium Technology. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

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 concerns around earnings quality. Learn more, and discover the 1 other warning sign 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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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.