Industry Analysts Just Made A Notable Upgrade To Their Diaceutics PLC (LON:DXRX) Revenue Forecasts

Shareholders in Diaceutics PLC (LON:DXRX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Diaceutics has also found favour with investors, with the stock up a remarkable 25% to UK£0.98 over the past week. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the current consensus from Diaceutics' three analysts is for revenues of UK£20m in 2022 which - if met - would reflect a substantial 29% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing UK£17m of revenue in 2022. The consensus has definitely become more optimistic, showing a sizeable gain to revenue forecasts.

View our latest analysis for Diaceutics

The consensus price target rose 10% to UK£1.75, with the analysts clearly more optimistic about Diaceutics' prospects following this update. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Diaceutics analyst has a price target of UK£2.00 per share, while the most pessimistic values it at UK£1.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Diaceutics is an easy business to forecast or the underlying assumptions are obvious.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Diaceutics' rate of growth is expected to accelerate meaningfully, with the forecast 66% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.6% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Diaceutics is expected to grow much faster than its 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're also forecasting more rapid revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Diaceutics.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Diaceutics that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

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.