Upgrade: Analysts Just Made A Sizeable Increase To Their Gofore Oyj (HEL:GOFORE) Forecasts

Celebrations may be in order for Gofore Oyj (HEL:GOFORE) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 6.1% over the past week, closing at €24.30. Could this big upgrade push the stock even higher?

After the upgrade, the dual analysts covering Gofore Oyj are now predicting revenues of €130m in 2022. If met, this would reflect a substantial 24% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 44% to €0.84. Prior to this update, the analysts had been forecasting revenues of €117m and earnings per share (EPS) of €0.73 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Gofore Oyj

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of €23.00, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Gofore Oyj at €27.00 per share, while the most bearish prices it at €21.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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. We can infer from the latest estimates that forecasts expect a continuation of Gofore Oyj'shistorical trends, as the 24% annualised revenue growth to the end of 2022 is roughly in line with the 26% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.0% per year. So it's pretty clear that Gofore Oyj is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Gofore Oyj could be a good candidate for more research.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Gofore Oyj that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.