Industry Analysts Just Made A Captivating Upgrade To Their Altium Limited (ASX:ALU) Revenue Forecasts

Altium Limited (ASX:ALU) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Altium has also found favour with investors, with the stock up a worthy 29% to AU$47.85 over the past week. 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 Altium from its 15 analysts is for revenues of US$319m in 2024 which, if met, would be a substantial 21% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 23% to US$0.62. Previously, the analysts had been modelling revenues of US$286m and earnings per share (EPS) of US$0.58 in 2024. The forecasts seem more optimistic now, with a nice increase in revenue and a small increase to earnings per share estimates.

Check out our latest analysis for Altium

With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.8% to AU$41.48 per share.

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. The analysts are definitely expecting Altium's growth to accelerate, with the forecast 21% annualised growth to the end of 2024 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Altium 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Altium.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Altium analysts - going out to 2026, 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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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.