Need To Know: Analysts Are Much More Bullish On ZOO Digital Group plc (LON:ZOO) Revenues

ZOO Digital Group plc (LON:ZOO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that ZOO Digital Group will make substantially more sales than they'd previously expected. The market seems to be pricing in some improvement in the business too, with the stock up 9.2% over the past week, closing at UK£1.13. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

After this upgrade, ZOO Digital Group's four analysts are now forecasting revenues of US$80m in 2023. This would be a solid 14% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$64m of revenue in 2023. It looks like there's been a clear increase in optimism around ZOO Digital Group, given the very substantial lift in revenue forecasts.

Check out our latest analysis for ZOO Digital Group

We'd point out that there was no major changes to their price target of UK£1.95, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values ZOO Digital Group at UK£1.89 per share, while the most bearish prices it at UK£1.87. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that ZOO Digital Group's revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2023 being well below the historical 21% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% annually. Even after the forecast slowdown in growth, it seems obvious that ZOO Digital Group is also expected to grow faster than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for ZOO Digital Group this year. Analysts also expect revenues to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at ZOO Digital Group.

Analysts are clearly in love with ZOO Digital Group at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 1 other risk we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks 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.