The analysts might have been a bit too bullish on Shenzhen Sunline Tech Co., Ltd. (SZSE:300348), given that the company fell short of expectations when it released its third-quarter results last week. Shenzhen Sunline Tech delivered a grave earnings miss, with both revenues (CN¥331m) and statutory earnings per share (CN¥0.01) falling badly short of analyst expectations. 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.

After the latest results, the seven analysts covering Shenzhen Sunline Tech are now predicting revenues of CN¥2.48b in 2025. If met, this would reflect a substantial 39% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 403% to CN¥0.22. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.49b and earnings per share (EPS) of CN¥0.25 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

Despite cutting their earnings forecasts,the analysts have lifted their price target 22% to CN¥10.79, suggesting that these impacts are not expected to weigh on the stock's value in the long term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Shenzhen Sunline Tech, with the most bullish analyst valuing it at CN¥20.33 and the most bearish at CN¥7.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the 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. The analysts are definitely expecting Shenzhen Sunline Tech's growth to accelerate, with the forecast 30% annualised growth to the end of 2025 ranking favourably alongside historical growth of 9.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shenzhen Sunline Tech 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Shenzhen Sunline Tech. 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 Shenzhen Sunline Tech going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Shenzhen Sunline Tech (1 is concerning!) that you should be aware of.

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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.