Need To Know: One Analyst Is Much More Bullish On Stanmore Resources Limited (ASX:SMR) Revenues

Celebrations may be in order for Stanmore Resources Limited (ASX:SMR) shareholders, with the covering analyst delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the upgrade, the current consensus from Stanmore Resources' single analyst is for revenues of US$3.6b in 2022 which - if met - would reflect a sizeable 182% increase on its sales over the past 12 months. Before the latest update, the analyst was foreseeing US$3.2b of revenue in 2022. The consensus has definitely become more optimistic, showing a decent improvement in revenue forecasts.

Our analysis indicates that SMR is potentially undervalued!

The consensus price target rose 19% to AU$4.10, with the analyst clearly more optimistic about Stanmore Resources' prospects 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. It's clear from the latest estimates that Stanmore Resources' rate of growth is expected to accelerate meaningfully, with the forecast 182% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 40% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.1% annually. It seems obvious that as part of the brighter growth outlook, Stanmore Resources is expected to grow faster than the wider industry.

The Bottom Line

The highlight for us was that the analyst increased their revenue forecasts for Stanmore Resources this year. They're also forecasting for revenues to perform better than companies in the wider market. There was also a nice increase in the price target, with the analyst apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Stanmore Resources.

The covering analyst is definitely bullish on Stanmore Resources, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including recent substantial insider selling. For more information, you can click through to our platform to learn more about this and the 1 other warning sign we've identified .

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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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.