The analyst covering Comba Telecom Systems Holdings Limited (HKG:2342) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the most recent consensus for Comba Telecom Systems Holdings from its single analyst is for revenues of HK$7.4b in 2020 which, if met, would be a huge 27% increase on its sales over the past 12 months. Before the latest update, the analyst was foreseeing HK$9.1b of revenue in 2020. The consensus view seems to have become more pessimistic on Comba Telecom Systems Holdings, noting the measurable cut to revenue estimates in this update.

View our latest analysis for Comba Telecom Systems Holdings

The consensus price target fell 10% to HK$2.96, with the analyst clearly less optimistic about Comba Telecom Systems Holdings' valuation following this update.

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. One thing stands out from these estimates, which is that Comba Telecom Systems Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to grow 27%. If achieved, this would be a much better result than the 4.8% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. So it looks like Comba Telecom Systems Holdings 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 the analyst cut their revenue estimates for this year. The analyst also expects revenues to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Comba Telecom Systems Holdings after today.

Thirsting for more data? One Comba Telecom Systems Holdings broker/analyst has provided estimates out to 2022, which can be seen 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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