Growth Investors: Industry Analysts Just Upgraded Their Red River Resources Limited (ASX:RVR) Revenue Forecasts By 13%

Red River Resources Limited (ASX:RVR) 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 upgrade, the latest consensus from Red River Resources' two analysts is for revenues of AU$127m in 2021, which would reflect a major 101% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of AU$112m in 2021. The consensus has definitely become more optimistic, showing a substantial gain in revenue forecasts.

View our latest analysis for Red River Resources

Additionally, the consensus price target for Red River Resources increased 11% to AU$0.30, showing a clear increase in optimism from the analysts involved. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Red River Resources at AU$0.40 per share, while the most bearish prices it at AU$0.20. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's clear from the latest estimates that Red River Resources' rate of growth is expected to accelerate meaningfully, with the forecast 101% revenue growth noticeably faster than its historical growth of 59% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Red River Resources to grow 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. They're also forecasting more rapid revenue growth than the wider market. There was also a nice increase in the price target, with analysts 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 Red River Resources.

Better yet, Red River Resources is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. You can learn more about these forecasts, for 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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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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