One thing we could say about the analysts on MGI Tech Co., Ltd. (SHSE:688114) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 eight analysts covering MGI Tech are now predicting revenues of CN¥3.3b in 2024. If met, this would reflect a decent 17% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CN¥3.8b of revenue in 2024. It looks like forecasts have become a fair bit less optimistic on MGI Tech, given the measurable cut to revenue estimates.

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. One thing stands out from these estimates, which is that MGI Tech is forecast to grow faster in the future than it has in the past, with revenues expected to display 23% annualised growth until the end of 2024. If achieved, this would be a much better result than the 22% annual decline over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. So it looks like MGI Tech is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on MGI Tech after today.

Want more information? We have estimates for MGI Tech from its eight analysts out until 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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