Upgrade: Analysts Just Made A Substantial Increase To Their Auction Technology Group plc (LON:ATG) Forecasts

Auction Technology Group plc (LON:ATG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 16% to UK£15.00 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After the upgrade, the twin analysts covering Auction Technology Group are now predicting revenues of UK£109m in 2022. If met, this would reflect a sizeable 140% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of UK£0.14 per share this year. Previously, the analysts had been modelling revenues of UK£98m and earnings per share (EPS) of UK£0.067 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Auction Technology Group

It will come as no surprise to learn that the analysts have increased their price target for Auction Technology Group 6.7% to UK£16.86 on the back of these upgrades. 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 Auction Technology Group analyst has a price target of UK£16.40 per share, while the most pessimistic values it at UK£15.20. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Auction Technology Group is an easy business to forecast or the underlying assumptions are obvious.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Auction Technology Group's rate of growth is expected to accelerate meaningfully, with the forecast 140% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 83% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Auction Technology Group to grow faster than 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Auction Technology Group.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Auction Technology Group going out as far as 2023, and you can see them 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.