Industry Analysts Just Upgraded Their Freshii Inc. (TSE:FRII) Revenue Forecasts By 12%

Celebrations may be in order for Freshii Inc. (TSE:FRII) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

Following the latest upgrade, the current consensus, from the three analysts covering Freshii, is for revenues of US$16m in 2020, which would reflect a sizeable 27% reduction in Freshii's sales over the past 12 months. Before the latest update, the analysts were foreseeing US$14m of revenue in 2020. It looks like there's been a clear increase in optimism around Freshii, given the nice gain to revenue forecasts.

Check out our latest analysis for Freshii

Notably, the analysts have cut their price target 10% to US$1.62, suggesting concerns around Freshii's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Freshii, with the most bullish analyst valuing it at US$2.75 and the most bearish at US$1.75 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 27%, a significant reduction from annual growth of 12% 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 12% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Freshii is expected to lag the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They also expect company revenue to perform worse 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. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Freshii.

That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Freshii to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.

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