The latest analyst coverage could presage a bad day for Dizal (Jiangsu) Pharmaceutical Co., Ltd. (SHSE:688192), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the most recent consensus for Dizal (Jiangsu) Pharmaceutical from its three analysts is for revenues of CN¥388m in 2024 which, if met, would be a huge 124% increase on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to CN¥2.54. Yet before this consensus update, the analysts had been forecasting revenues of CN¥490m and losses of CN¥1.56 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target was broadly unchanged at CN¥54.00, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Dizal (Jiangsu) Pharmaceutical. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Dizal (Jiangsu) Pharmaceutical after the downgrade.
That said, the analysts might have good reason to be negative on Dizal (Jiangsu) Pharmaceutical, given a short cash runway. For more information, you can click here to discover this and the 1 other concern we've identified.
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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