This Broker Just Slashed Their China Display Optoelectronics Technology Holdings Limited (HKG:334) Earnings Forecasts
The analyst covering China Display Optoelectronics Technology Holdings Limited (HKG:334) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.
Following the latest downgrade, the current consensus, from the solo analyst covering China Display Optoelectronics Technology Holdings, is for revenues of CN¥3.8b in 2020, which would reflect a stressful 30% reduction in China Display Optoelectronics Technology Holdings' sales over the past 12 months. Statutory earnings per share are anticipated to plunge 60% to CN¥0.01 in the same period. Before this latest update, the analyst had been forecasting revenues of CN¥5.1b and earnings per share (EPS) of CN¥0.055 in 2020. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.
Check out our latest analysis for China Display Optoelectronics Technology Holdings
The consensus price target fell 8.6% to CN¥0.48, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on China Display Optoelectronics Technology Holdings, with the most bullish analyst valuing it at CN¥0.48 and the most bearish at CN¥0.47 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 30% revenue decline a notable change from historical growth of 25% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 13% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Display Optoelectronics Technology Holdings is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that China Display Optoelectronics Technology Holdings' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
As you can see, the analyst clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with China Display Optoelectronics Technology Holdings' financials, such as its declining profit margins. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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