Broker Revenue Forecasts For GCL Technology Holdings Limited (HKG:3800) Are Surging Higher

Celebrations may be in order for GCL Technology Holdings Limited (HKG:3800) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that GCL Technology Holdings will make substantially more sales than they'd previously expected.

Following the upgrade, the most recent consensus for GCL Technology Holdings from its five analysts is for revenues of CN¥30b in 2022 which, if met, would be a notable 15% increase on its sales over the past 12 months. Per-share earnings are expected to jump 39% to CN¥0.49. Before this latest update, the analysts had been forecasting revenues of CN¥27b and earnings per share (EPS) of CN¥0.45 in 2022. Sentiment certainly seems to have improved in recent times, with a decent improvement in revenue and a modest lift to earnings per share estimates.

See our latest analysis for GCL Technology Holdings

Despite these upgrades, the analysts have not made any major changes to their price target of CN¥3.92, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values GCL Technology Holdings at CN¥4.88 per share, while the most bearish prices it at CN¥3.51. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await GCL Technology Holdings shareholders.

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. For example, we noticed that GCL Technology Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 15% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 3.3% 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 16% annually. So while GCL Technology Holdings' revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall 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 forecasts, although the latest estimates suggest that GCL Technology Holdings will grow in line with the overall market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at GCL Technology Holdings.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential warning sign with GCL Technology Holdings, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 1 other warning sign 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.

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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.