News Flash: Analysts Just Made A Captivating Upgrade To Their Frasers Group plc (LON:FRAS) Forecasts

Celebrations may be in order for Frasers Group plc (LON:FRAS) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Frasers Group too, with the stock up 18% to UK£8.87 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the upgrade, the latest consensus from Frasers Group's three analysts is for revenues of UK£5.3b in 2023, which would reflect a decent 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to expand 14% to UK£0.72. Before this latest update, the analysts had been forecasting revenues of UK£4.5b and earnings per share (EPS) of UK£0.54 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Frasers Group

With these upgrades, we're not surprised to see that the analysts have lifted their price target 17% to UK£8.04 per share. 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. There are some variant perceptions on Frasers Group, with the most bullish analyst valuing it at UK£10.00 and the most bearish at UK£5.50 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 Frasers Group's rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 5.7% 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 5.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Frasers Group to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. 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 Frasers Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Frasers Group analysts - going out to 2025, 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.

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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.