Celebrations may be in order for Nickel Mines Limited (ASX:NIC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The market may be pricing in some blue sky too, with the share price gaining 14% to AU$1.53 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the most recent consensus for Nickel Mines from its ten analysts is for revenues of US$1.0b in 2022 which, if met, would be a sizeable 59% increase on its sales over the past 12 months. Per-share earnings are expected to jump 71% to US$0.094. Prior to this update, the analysts had been forecasting revenues of US$946m and earnings per share (EPS) of US$0.089 in 2022. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrades to both revenue and earnings per share forecasts for this year.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of AU$1.74, suggesting that the forecast performance does not have a long term impact on the company'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 Nickel Mines analyst has a price target of AU$2.00 per share, while the most pessimistic values it at AU$1.60. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
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 period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 59% growth on an annualised basis. That is in line with its 56% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 0.1% annually. So it's clear that not only is revenue growth expected to be maintained, but Nickel Mines is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales 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 Nickel Mines.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Nickel Mines analysts - going out to 2024, and you can see them free 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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