The analysts covering Zhejiang Jiuzhou Pharmaceutical Co., Ltd (SHSE:603456) 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) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the current consensus from Zhejiang Jiuzhou Pharmaceutical's four analysts is for revenues of CN¥6.3b in 2024 which - if met - would reflect a decent 14% increase on its sales over the past 12 months. Statutory earnings per share are presumed to climb 16% to CN¥1.34. Previously, the analysts had been modelling revenues of CN¥8.2b and earnings per share (EPS) of CN¥1.71 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 25% to CN¥28.31.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Zhejiang Jiuzhou Pharmaceutical's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Compare this to the 221 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it looks like Zhejiang Jiuzhou Pharmaceutical is forecast to grow at about the same rate as the wider 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. 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. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Zhejiang Jiuzhou Pharmaceutical.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Zhejiang Jiuzhou Pharmaceutical analysts - going out to 2026, and you can see them 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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