The latest analyst coverage could presage a bad day for Jiangsu Pacific Quartz Co., Ltd (SHSE:603688), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. The stock price has risen 5.4% to CN¥90.73 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the most recent consensus for Jiangsu Pacific Quartz from its three analysts is for revenues of CN¥12b in 2024 which, if met, would be a huge 64% increase on its sales over the past 12 months. Per-share earnings are expected to climb 19% to CN¥16.67. Prior to this update, the analysts had been forecasting revenues of CN¥14b and earnings per share (EPS) of CN¥26.05 in 2024. Indeed, we can see that the analysts are a lot more bearish about Jiangsu Pacific Quartz's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analysts have cut their price target 8.1% to CN¥125.
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. We can infer from the latest estimates that forecasts expect a continuation of Jiangsu Pacific Quartz'shistorical trends, as the 64% annualised revenue growth to the end of 2024 is roughly in line with the 58% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 23% annually. So it's pretty clear that Jiangsu Pacific Quartz is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. 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.
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 Jiangsu Pacific Quartz's business, like concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for free on our platform here.
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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.