Today is shaping up negative for Hoymiles Power Electronics Inc. (SHSE:688032) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the five analysts covering Hoymiles Power Electronics are now predicting revenues of CN¥2.6b in 2024. If met, this would reflect a substantial 39% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CN¥2.9b of revenue in 2024. The consensus view seems to have become more pessimistic on Hoymiles Power Electronics, noting the measurable cut to revenue estimates in this update.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Hoymiles Power Electronics' growth to accelerate, with the forecast 92% annualised growth to the end of 2024 ranking favourably alongside historical growth of 37% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hoymiles Power Electronics to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Hoymiles Power Electronics going forwards.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Hoymiles Power Electronics' business, like its declining profit margins. For more information, you can click here to discover this and the 1 other risk we've identified.

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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.