Need To Know: Analysts Are Much More Bullish On PAX Global Technology Limited (HKG:327)

PAX Global Technology Limited (HKG:327) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 16% to HK$7.00 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After this upgrade, PAX Global Technology's dual analysts are now forecasting revenues of HK$5.7b in 2020. This would be a decent 12% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 31% to HK$0.82. Before this latest update, the analysts had been forecasting revenues of HK$5.2b and earnings per share (EPS) of HK$0.62 in 2020. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for PAX Global Technology

With these upgrades, we're not surprised to see that the analysts have lifted their price target 80% to HK$9.84 per share. 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 PAX Global Technology at HK$10.17 per share, while the most bearish prices it at HK$5.20. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of PAX Global Technology'shistorical trends, as next year's 12% revenue growth is roughly in line with 15% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% next year. So although PAX Global Technology is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider 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 PAX Global Technology will grow in line with the overall market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at PAX Global Technology.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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