The latest analyst coverage could presage a bad day for Ningbo Deye Technology Group Co., Ltd. (SHSE:605117), 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) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Surprisingly the share price has been buoyant, rising 13% to CN¥95.60 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the downgrade, the latest consensus from Ningbo Deye Technology Group's seven analysts is for revenues of CN¥10.0b in 2024, which would reflect a huge 37% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 27% to CN¥4.82. Before this latest update, the analysts had been forecasting revenues of CN¥12b and earnings per share (EPS) of CN¥6.57 in 2024. Indeed, we can see that the analysts are a lot more bearish about Ningbo Deye Technology Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Ningbo Deye Technology Group's growth to accelerate, with the forecast 52% annualised growth to the end of 2024 ranking favourably alongside historical growth of 32% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Ningbo Deye Technology Group is expected to grow much 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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Ningbo Deye Technology Group, and a few readers might choose to steer clear of the stock.
There might be good reason for analyst bearishness towards Ningbo Deye Technology Group, 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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