Rainbows and Unicorns: CentralNic Group Plc (LON:CNIC) Analysts Just Became A Lot More Optimistic

CentralNic Group Plc (LON:CNIC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. It will be interesting to see if the latest numbers are enough to change investors' appetite for CentralNic Group. Over the past week the stock price has fallen 7.9% to UK£1.23.

After the upgrade, the five analysts covering CentralNic Group are now predicting revenues of US$514m in 2022. If met, this would reflect a huge 25% 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 US$0.027 per share this year. Previously, the analysts had been modelling revenues of US$449m and earnings per share (EPS) of US$0.024 in 2022. 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.

Check out our latest analysis for CentralNic Group

As a result, it might be a surprise to see that the analysts have cut their price target 5.4% to UK£2.75, which could suggest the forecast improvement in performance is not expected to last. 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. Currently, the most bullish analyst values CentralNic Group at UK£3.50 per share, while the most bearish prices it at UK£2.24. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that CentralNic Group's revenue growth is expected to slow, with the forecast 25% annualised growth rate until the end of 2022 being well below the historical 54% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% per year. Even after the forecast slowdown in growth, it seems obvious that CentralNic Group is also expected 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at CentralNic Group.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple CentralNic Group analysts - going out to 2024, 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.