Analyst Forecasts For Air Arabia PJSC (DFM:AIRARABIA) Are Surging Higher

Shareholders in Air Arabia PJSC (DFM:AIRARABIA) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Air Arabia PJSC has also found favour with investors, with the stock up a noteworthy 12% to د.إ1.63 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After this upgrade, Air Arabia PJSC's four analysts are now forecasting revenues of د.إ4.3b in 2022. This would be a huge 36% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 49% to د.إ0.23. Prior to this update, the analysts had been forecasting revenues of د.إ3.8b and earnings per share (EPS) of د.إ0.16 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Air Arabia PJSC

Despite these upgrades, the analysts have not made any major changes to their price target of د.إ1.68, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Air Arabia PJSC at د.إ2.00 per share, while the most bearish prices it at د.إ1.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Air Arabia PJSC's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 36% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 9.1% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 26% annually. So it looks like Air Arabia PJSC is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Air Arabia PJSC could be a good candidate for more research.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Air Arabia PJSC going out to 2024, and you can see them 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.