One thing we could say about the analysts on Wuxi Lead Intelligent Equipment CO.,LTD. (SZSE:300450) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Investors however, have been notably more optimistic about Wuxi Lead Intelligent EquipmentLTD recently, with the stock price up a magnificent 32% to CN¥24.43 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

After the downgrade, the 13 analysts covering Wuxi Lead Intelligent EquipmentLTD are now predicting revenues of CN¥16b in 2025. If met, this would reflect a sizeable 25% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 3,570% to CN¥1.40. Before this latest update, the analysts had been forecasting revenues of CN¥18b and earnings per share (EPS) of CN¥1.77 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

Analysts made no major changes to their price target of CN¥21.94, suggesting the downgrades are not expected to have a long-term impact on Wuxi Lead Intelligent EquipmentLTD's valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Wuxi Lead Intelligent EquipmentLTD's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 19% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 17% annually. Factoring in the forecast slowdown in growth, it looks like Wuxi Lead Intelligent EquipmentLTD is forecast to grow at about the same rate as 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 Wuxi Lead Intelligent EquipmentLTD. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. 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 Wuxi Lead Intelligent EquipmentLTD after the downgrade.

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 Wuxi Lead Intelligent EquipmentLTD's business, like concerns around earnings quality. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

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