News Flash: Analysts Just Made A Substantial Upgrade To Their Incitec Pivot Limited (ASX:IPL) Forecasts

Incitec Pivot Limited (ASX:IPL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the latest upgrade, Incitec Pivot's 13 analysts currently expect revenues in 2023 to be AU$6.4b, approximately in line with the last 12 months. Before the latest update, the analysts were foreseeing AU$5.7b of revenue in 2023. It looks like there's been a clear increase in optimism around Incitec Pivot, given the substantial gain in revenue forecasts.

Check out the opportunities and risks within the AU Chemicals industry.

There was no particular change to the consensus price target of AU$4.25, with Incitec Pivot's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Incitec Pivot at AU$5.05 per share, while the most bearish prices it at AU$3.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Incitec Pivot shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 1.5% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 9.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.7% annually for the foreseeable future. It's pretty clear that Incitec Pivot's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Incitec Pivot this year. They also expect company revenue to perform worse than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Incitec Pivot.

Better yet, our automated discounted cash flow calculation (DCF) suggests Incitec Pivot 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.

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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.