Industry Analysts Just Made A Notable Upgrade To Their Admiral Group plc (LON:ADM) Revenue Forecasts

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

Following the latest upgrade, the current consensus, from the eight analysts covering Admiral Group, is for revenues of UK£888m in 2022, which would reflect a substantial 40% reduction in Admiral Group's sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 29% to UK£1.61 in the same period. Previously, the analysts had been modelling revenues of UK£802m and earnings per share (EPS) of UK£1.55 in 2022. Sentiment certainly seems to have improved in recent times, with a decent improvement in revenue and a modest lift to earnings per share estimates.

Check out our latest analysis for Admiral Group

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of UK£29.10, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Admiral Group, with the most bullish analyst valuing it at UK£35.00 and the most bearish at UK£17.05 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Admiral Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 40% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 6.9% 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 4.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Admiral Group is expected to lag the wider 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. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Admiral Group.

Analysts are definitely bullish on Admiral 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. You can learn more, and discover the 2 other risks we've identified, for free on our platform here.

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.