Analysts Are Betting On Vtech Holdings Limited (HKG:303) With A Big Upgrade This Week

Shareholders in Vtech Holdings Limited (HKG:303) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Vtech Holdings will make substantially more sales than they'd previously expected.

After this upgrade, Vtech Holdings' three analysts are now forecasting revenues of US$2.6b in 2022. This would be a decent 8.9% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to decrease 8.3% to US$0.84 in the same period. Prior to this update, the analysts had been forecasting revenues of US$2.3b and earnings per share (EPS) of US$0.79 in 2022. The forecasts seem more optimistic now, with a nice increase in revenue and a slight bump in earnings per share estimates.

View our latest analysis for Vtech Holdings

Despite these upgrades, the analysts have not made any major changes to their price target of US$8.76, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic Vtech Holdings analyst has a price target of US$71.10 per share, while the most pessimistic values it at US$63.10. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Vtech Holdings' past performance and to peers in the same industry. The analysts are definitely expecting Vtech Holdings' growth to accelerate, with the forecast 8.9% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Vtech Holdings is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Vtech Holdings.

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 Vtech Holdings analysts - going out to 2024, and you can see them 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. 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.
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