News Flash: Analysts Just Made A Meaningful Upgrade To Their Kogan.com Ltd (ASX:KGN) Forecasts

Celebrations may be in order for Kogan.com Ltd (ASX:KGN) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. 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 7.4% over the past week, closing at AU$17.38. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After this upgrade, Kogan.com's six analysts are now forecasting revenues of AU$774m in 2021. This would be a sizeable 55% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 82% to AU$0.52. Prior to this update, the analysts had been forecasting revenues of AU$695m and earnings per share (EPS) of AU$0.49 in 2021. Sentiment certainly seems to have improved in recent times, with a nice gain to revenue and a slight bump in earnings per share estimates.

Check out our latest analysis for Kogan.com

Despite these upgrades, the analysts have not made any major changes to their price target of AU$19.32, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. Currently, the most bullish analyst values Kogan.com at AU$25.00 per share, while the most bearish prices it at AU$11.50. 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 Kogan.com's rate of growth is expected to accelerate meaningfully, with the forecast 55% revenue growth noticeably faster than its historical growth of 20% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Kogan.com to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts 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 Kogan.com.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Kogan.com analysts - going out to 2023, and you can see them 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. 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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