Upgrade: Analysts Just Made A Captivating Increase To Their Lycopodium Limited (ASX:LYL) Forecasts

Lycopodium Limited (ASX:LYL) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analyst modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 8.2% over the past week, closing at AU$5.25. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the latest consensus from Lycopodium's solo analyst is for revenues of AU$250m in 2022, which would reflect a substantial 57% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 36% to AU$0.49. Prior to this update, the analyst had been forecasting revenues of AU$212m and earnings per share (EPS) of AU$0.39 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 Lycopodium

With these upgrades, we're not surprised to see that the analyst has lifted their price target 8.7% to AU$6.85 per share.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analyst is definitely expecting Lycopodium's growth to accelerate, with the forecast 57% annualised growth to the end of 2022 ranking favourably alongside historical growth of 0.6% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Lycopodium to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Lycopodium could be worth investigating further.

Better yet, our automated discounted cash flow calculation (DCF) suggests Lycopodium could be moderately undervalued. You can learn more about our valuation methodology 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.

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.

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