Shareholders might have noticed that Gotion High-tech Co.,Ltd. (SZSE:002074) filed its quarterly result this time last week. The early response was not positive, with shares down 2.2% to CN¥17.76 in the past week. Revenues of CN¥7.5b smashed analyst forecasts, although statutory earnings came up 68% short, at CN¥0.04 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the consensus forecast from Gotion High-techLtd's 14 analysts is for revenues of CN¥38.9b in 2024. This reflects a substantial 22% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 22% to CN¥0.64. Before this earnings report, the analysts had been forecasting revenues of CN¥42.1b and earnings per share (EPS) of CN¥0.69 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.0% to CN¥22.67. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Gotion High-techLtd, with the most bullish analyst valuing it at CN¥31.85 and the most bearish at CN¥10.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 Gotion High-techLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 30% growth on an annualised basis. This is compared to a historical growth rate of 44% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% annually. Even after the forecast slowdown in growth, it seems obvious that Gotion High-techLtd is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded Gotion High-techLtd's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Gotion High-techLtd's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Gotion High-techLtd. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Gotion High-techLtd going out to 2026, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for Gotion High-techLtd that we have uncovered.

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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.