Industry Analysts Just Made A Captivating Upgrade To Their Aroa Biosurgery Limited (ASX:ARX) Revenue Forecasts

Shareholders in Aroa Biosurgery Limited (ASX:ARX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term 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 most recent consensus for Aroa Biosurgery from its five analysts is for revenues of NZ$63m in 2023 which, if met, would be a substantial 58% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of NZ$55m in 2023. The consensus has definitely become more optimistic, showing a solid increase in revenue forecasts.

Our analysis indicates that ARX is potentially undervalued!

We'd point out that there was no major changes to their price target of NZ$1.39, suggesting the latest estimates were not enough to shift their view on the value of the business. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Aroa Biosurgery at NZ$1.52 per share, while the most bearish prices it at NZ$0.44. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the 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 Aroa Biosurgery's rate of growth is expected to accelerate meaningfully, with the forecast 58% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 18% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Aroa Biosurgery is expected to grow much faster than its industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Aroa Biosurgery this year. They're also forecasting more rapid revenue growth than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Aroa Biosurgery.

It's great to see the analysts upgrading their estimates, but the biggest highlight to us is that the business is expected to become profitable in the foreseeable future. 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. 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.