After today’s downgrade, things are looking bleak for Shanghai Putailai New Energy Technology Co.,Ltd. (SHSE:603659)

One thing we can say about the analysts: Shanghai Putailai New Energy Technology Co., Ltd. (SHSE:603659) – they are not optimistic as they have just significantly revised downward their short-term (statutory) forecasts for the company. Both revenue and earnings per share (EPS) estimates were significantly lowered as analysts considered the latest business outlook and concluded that they were previously too optimistic.

Following the downgrade, the latest consensus from the twelve analysts for Shanghai Putailai New Energy Technology Ltd. is forecasting revenues of CN¥16 billion in 2024. If achieved, this would be a notable increase of 12% over the last 12 months’ sales. Earnings per share are expected to increase 32% to CN¥0.91. Previously, analysts had forecast revenues of CN¥18 billion and earnings per share (EPS) of CN¥1.25 in 2024. It looks like analyst sentiment has deteriorated significantly, with a measurable cut in revenue estimates and a fairly sharp decline in earnings per share numbers.

Check out our latest analysis for Shanghai Putailai New Energy TechnologyLtd

The consensus price target fell 18% to CNY 17.30, with weaker earnings prospects significantly exceeding analysts’ valuation estimates.

We can also look at these estimates in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether the forecasts are more or less optimistic compared to other companies in the industry. From the latest estimates, we can conclude that the forecasts expect Shanghai Putailai New Energy Technology Ltd.’s historical trends to continuation, as the 26% annual revenue growth through the end of 2024 is roughly in line with the 29% annual revenue growth over the past five years. In contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue by 15% per year. So, while Shanghai Putailai New Energy Technology Ltd. is expected to maintain its revenue growth rate, it is definitely expected to grow faster than the industry as a whole.

The conclusion

Most importantly, analysts have been cutting their earnings per share estimates as they expect a significant deterioration in business conditions. Unfortunately, analysts have also been cutting their revenue forecasts, even though our data suggests that revenues are expected to be better than the broader market. Given the magnitude of the downgrades, it would not be surprising if the market became more cautious on the company.

After such a downgrade, it’s pretty clear that previous forecasts were too optimistic. In addition, we’ve identified several potential issues in Shanghai Putailai New Energy Technology Ltd.’s business, such as declining profit margins. Learn more and discover the three other risks we’ve identified for free here on our platform.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.