The latest analyst coverage could presage a bad day for Shenzhen Xinyichang Technology Co., Ltd. (SHSE:688383), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. The stock price has risen 8.3% to CN¥65.73 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the most recent consensus for Shenzhen Xinyichang Technology from its three analysts is for revenues of CN¥1.3b in 2024 which, if met, would be a substantial 39% increase on its sales over the past 12 months. Statutory earnings per share are presumed to bounce 495% to CN¥1.81. Previously, the analysts had been modelling revenues of CN¥1.6b and earnings per share (EPS) of CN¥2.75 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shenzhen Xinyichang Technology's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Shenzhen Xinyichang Technology's growth to accelerate, with the forecast 39% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.3% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Shenzhen Xinyichang Technology is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shenzhen Xinyichang Technology. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Shenzhen Xinyichang Technology, and their negativity could be grounds for caution.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Shenzhen Xinyichang Technology, including its declining profit margins. Learn more, and discover the 2 other flags we've identified, for 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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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.