Stock Analysis

Rainbows and Unicorns: EKF Diagnostics Holdings plc (LON:EKF) Analysts Just Became A Lot More Optimistic

  •  Updated
AIM:EKF
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Celebrations may be in order for EKF Diagnostics Holdings plc (LON:EKF) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that EKF Diagnostics Holdings will make substantially more sales than they'd previously expected. Investors have been pretty optimistic on EKF Diagnostics Holdings too, with the stock up 10% to UK£0.74 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the current consensus from EKF Diagnostics Holdings' dual analysts is for revenues of UK£60m in 2021 which - if met - would reflect a substantial 21% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£52m in 2021. The consensus has definitely become more optimistic, showing a nice increase in revenue forecasts.

View our latest analysis for EKF Diagnostics Holdings

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AIM:EKF Earnings and Revenue Growth March 31st 2021

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the EKF Diagnostics Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that EKF Diagnostics Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 7.7% p.a. 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 10% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect EKF Diagnostics Holdings to grow faster than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for EKF Diagnostics Holdings this year. They're also forecasting more rapid revenue growth than the wider market. More bullish expectations could be a signal for investors to take a closer look at EKF Diagnostics Holdings.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential warning signs with EKF Diagnostics Holdings, including its declining profit margins. You can learn more, and discover the 2 other warning signs we've identified, for 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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