Industry Analysts Just Upgraded Their 3i Group plc (LON:III) Revenue Forecasts By 10%

3i Group plc (LON:III) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

After the upgrade, the consensus from 3i Group's six analysts is for revenues of UK£2.7b in 2023, which would reflect a sizeable 35% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of UK£2.5b in 2023. The consensus has definitely become more optimistic, showing a nice increase in revenue forecasts.

Our analysis indicates that III is potentially undervalued!

There was no particular change to the consensus price target of UK£16.99, with 3i Group's latest outlook seemingly not enough to result in a change of valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic 3i Group analyst has a price target of UK£19.40 per share, while the most pessimistic values it at UK£14.72. 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 would highlight that sales are expected to reverse, with a forecast 35% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 18% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.8% per year. It's pretty clear that 3i Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at 3i Group.

Analysts are definitely bullish on 3i Group, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 1 other concern we've identified .

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.