Industry Analysts Just Made A Sizeable Upgrade To Their Xaar plc (LON:XAR) Revenue Forecasts

Xaar plc (LON:XAR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The market may be pricing in some blue sky too, with the share price gaining 11% to UK£2.43 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After the upgrade, the two analysts covering Xaar are now predicting revenues of UK£72m in 2022. If met, this would reflect a substantial 22% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£65m in 2022. It looks like there's been a clear increase in optimism around Xaar, given the nice gain to revenue forecasts.

Check out our latest analysis for Xaar

Additionally, the consensus price target for Xaar increased 18% to UK£2.93, showing a clear increase in optimism from the analysts involved. 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. There are some variant perceptions on Xaar, with the most bullish analyst valuing it at UK£3.00 and the most bearish at UK£2.85 per share. This is a very narrow spread of estimates, implying either that Xaar is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xaar's past performance and to peers in the same industry. For example, we noticed that Xaar's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 22% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 17% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.1% annually. So it looks like Xaar is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Xaar 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. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Xaar.

Of course, there's always more to the story. At least one of Xaar's two analysts has provided estimates out to 2024, which can be seen for free on our platform here.

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.

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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.