New Forecasts: Here's What Analysts Think The Future Holds For Insurance Australia Group Limited (ASX:IAG)

Insurance Australia Group Limited (ASX:IAG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Insurance Australia Group will make substantially more sales than they'd previously expected.

Following the upgrade, the current consensus from Insurance Australia Group's nine analysts is for revenues of AU$7.6b in 2021 which - if met - would reflect a satisfactory 2.7% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 50% to AU$0.066. However, before this estimates update, the consensus had been expecting revenues of AU$7.6b and AU$0.07 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

See our latest analysis for Insurance Australia Group

There's been no major changes to the consensus price target of AU$5.65, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Insurance Australia Group analyst has a price target of AU$6.20 per share, while the most pessimistic values it at AU$4.85. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Insurance Australia Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.4% annualised growth until the end of 2021. If achieved, this would be a much better result than the 4.1% annual decline 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 3.3% annually. So it looks like Insurance Australia Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Insurance Australia Group is moving incrementally towards profitability. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Insurance Australia Group's revenues are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Insurance Australia Group.

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 Insurance Australia Group going out to 2024, and you can see them free on our platform here..

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. 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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