Earnings Update: Here's Why Analysts Just Lifted Their Updater Services Limited (NSE:UDS) Price Target To ₹470

Shareholders of Updater Services Limited (NSE:UDS) will be pleased this week, given that the stock price is up 12% to ₹409 following its latest second-quarter results. Revenues came in 4.9% below expectations, at ₹6.8b. Statutory earnings per share were relatively better off, with a per-share profit of ₹11.30 being roughly in line with analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Updater Services

Following the latest results, Updater Services' four analysts are now forecasting revenues of ₹28.2b in 2025. This would be a meaningful 8.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 15% to ₹16.95. Before this earnings report, the analysts had been forecasting revenues of ₹28.4b and earnings per share (EPS) of ₹17.40 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 8.7% to ₹470, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Updater Services analyst has a price target of ₹557 per share, while the most pessimistic values it at ₹406. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Updater Services' rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 14% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Updater Services is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Updater Services analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Updater Services that you need to take into consideration.

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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.