Need To Know: Analysts Are Much More Bullish On Safilo Group S.p.A. (BIT:SFL)

Safilo Group S.p.A. (BIT:SFL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 7.1% over the past week, closing at €1.51. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After the upgrade, the five analysts covering Safilo Group are now predicting revenues of €973m in 2021. If met, this would reflect a sizeable 25% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting €0.022 in per-share earnings. Yet prior to the latest estimates, the analysts had been forecasting revenues of €876m and losses of €0.045 per share in 2021. So we can see that this has sparked a pretty clear upgrade to expectations, with higher revenues anticipated to lead to profit sooner than previously forecast.

See our latest analysis for Safilo Group

It will come as no surprise to learn that the analysts have increased their price target for Safilo Group 12% to €1.51 on the back of these upgrades. 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. Currently, the most bullish analyst values Safilo Group at €1.63 per share, while the most bearish prices it at €1.10. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. For example, we noticed that Safilo Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 55% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 11% 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 10% annually. Not only are Safilo Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that there is now an expectation for Safilo Group to become profitable this year, compared to previous expectations of a loss. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Safilo Group could be worth investigating further.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Safilo Group going out to 2023, and you can see them 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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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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