Dialight plc (LON:DIA) Just Reported And Analysts Have Been Lifting Their Price Targets

It's been a good week for Dialight plc (LON:DIA) shareholders, because the company has just released its latest yearly results, and the shares gained 5.3% to UK£2.58. It was a pretty bad result overall; while revenues were in line with expectations at UK£119m, statutory losses exploded to UK£0.24 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Dialight

After the latest results, the dual analysts covering Dialight are now predicting revenues of UK£124.2m in 2021. If met, this would reflect a satisfactory 4.4% improvement in sales compared to the last 12 months. Dialight is also expected to turn profitable, with statutory earnings of UK£0.095 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£128.6m and earnings per share (EPS) of UK£0.10 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

What's most unexpected is that the consensus price target rose 11% to UK£3.10, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. One thing stands out from these estimates, which is that Dialight is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.4% annualised growth until the end of 2021. If achieved, this would be a much better result than the 5.5% annual decline 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 revenue grow 32% per year. So although Dialight's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

You can also see whether Dialight is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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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