Bullish: This Analyst Just Lifted Their SpiceJet Limited (NSE:SPICEJET) Outlook For This Year

Shareholders in SpiceJet Limited (NSE:SPICEJET) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term 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. SpiceJet has also found favour with investors, with the stock up a worthy 10% to ₹55.35 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After the upgrade, the consensus from SpiceJet's single analyst is for revenues of ₹47b in 2021, which would reflect a disturbing 42% decline in sales compared to the last year of performance. Per-share losses are expected to see a sharp uptick, reaching ₹26.71. Yet prior to the latest estimates, the analyst had been forecasting revenues of ₹41b and losses of ₹39.91 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for SpiceJet

Despite these upgrades, the analyst has not made any major changes to their price target of ₹57.36, implying that their latest estimates don't have a long term impact on what they think 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. There are some variant perceptions on SpiceJet, with the most bullish analyst valuing it at ₹85.00 and the most bearish at ₹26.50 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 42% revenue decline a notable change from historical growth of 18% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 29% annually for the foreseeable future. It's pretty clear that SpiceJet's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analyst reduced their loss per share estimates for this year, reflecting increased optimism around SpiceJet's prospects. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So SpiceJet could be a good candidate for more research.

It's great to see this analyst upgrading their estimates, but the biggest highlight to us is that the business is expected to become profitable in the foreseeable future. You can learn more about these forecasts, 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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