Brokers Are Upgrading Their Views On BayWa Aktiengesellschaft (ETR:BYW) With These New Forecasts

BayWa Aktiengesellschaft (ETR:BYW) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the upgrade, the latest consensus from BayWa's three analysts is for revenues of €25b in 2022, which would reflect a credible 6.9% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 6.7% to €3.69 in the same period. Prior to this update, the analysts had been forecasting revenues of €22b and earnings per share (EPS) of €2.98 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Our analysis indicates that BYW is potentially overvalued!

Despite these upgrades, the analysts have not made any major changes to their price target of €55.25, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values BayWa at €62.00 per share, while the most bearish prices it at €48.50. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting BayWa's growth to accelerate, with the forecast 6.9% annualised growth to the end of 2022 ranking favourably alongside historical growth of 5.6% per annum 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 2.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that BayWa is expected to grow much faster than its 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. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at BayWa.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for BayWa going out to 2024, 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.