Rainbows and Unicorns: Payfare Inc. (TSE:PAY) Analysts Just Became A Lot More Optimistic

Payfare Inc. (TSE:PAY) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 11% to CA$6.92 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After this upgrade, Payfare's five analysts are now forecasting revenues of CA$123m in 2022. This would be a sizeable 94% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 49% to CA$0.18. Yet prior to the latest estimates, the analysts had been forecasting revenues of CA$112m and losses of CA$0.59 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

View our latest analysis for Payfare

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Payfare's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 142% growth on an annualised basis. This is compared to a historical growth rate of 348% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.8% per year. So it's pretty clear that, while Payfare's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Payfare's prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations, it might be time to take another look at Payfare.

That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Payfare to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.

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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.