Broker Revenue Forecasts For Macmahon Holdings Limited (ASX:MAH) Are Surging Higher

Macmahon Holdings Limited (ASX:MAH) 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. The market seems to be pricing in some improvement in the business too, with the stock up 9.4% over the past week, closing at AU$0.17. Could this big upgrade push the stock even higher?

After the upgrade, the four analysts covering Macmahon Holdings are now predicting revenues of AU$1.6b in 2022. If met, this would reflect a credible 5.6% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of AU$1.4b in 2022. It looks like there's been a clear increase in optimism around Macmahon Holdings, given the nice gain to revenue forecasts.

View our latest analysis for Macmahon Holdings

Notably, the analysts have cut their price target 14% to AU$0.29, suggesting concerns around Macmahon Holdings' 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. There are some variant perceptions on Macmahon Holdings, with the most bullish analyst valuing it at AU$0.35 and the most bearish at AU$0.25 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. We would highlight that Macmahon Holdings' revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 26% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 0.1% annually. So it's clear that despite the slowdown in growth, Macmahon Holdings is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. Analysts also expect revenues to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Macmahon Holdings.

Looking for more information? At least one of Macmahon Holdings' four analysts has provided estimates out to 2024, which can be seen for 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. 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.