Growth Investors: Industry Analysts Just Upgraded Their Esken Limited (LON:ESKN) Revenue Forecasts By 6.4%

Esken Limited (LON:ESKN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the upgrade, the most recent consensus for Esken from its four analysts is for revenues of UK£113m in 2023 which, if met, would be a reasonable 2.0% increase on its sales over the past 12 months. Losses are forecast to narrow 9.5% to UK£0.028 per share. However, before this estimates update, the consensus had been expecting revenues of UK£107m and UK£0.03 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for both revenues and losses per share.

Our analysis indicates that ESKN is potentially overvalued!

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Esken's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 2.0% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 7.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. So although Esken's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Esken is moving incrementally towards profitability. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower 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 Esken.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential risks with Esken, including a short cash runway. You can learn more, and discover the 2 other risks we've identified, 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.