Stock Analysis

Analysts Are Betting On Saras S.p.A. (BIT:SRS) With A Big Upgrade This Week

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Saras S.p.A. (BIT:SRS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Saras will make substantially more sales than they'd previously expected. Saras shares have been sold down a little recently, so investors may be hoping the latest upgrade changes the market's appetite for the business. Over the past week the stock price has fallen 5.3% to €1.35.

Following the latest upgrade, the current consensus, from the four analysts covering Saras, is for revenues of €14b in 2023, which would reflect a perceptible 3.2% reduction in Saras' sales over the past 12 months. Statutory earnings per share are supposed to tumble 32% to €0.28 in the same period. Before this latest update, the analysts had been forecasting revenues of €12b and earnings per share (EPS) of €0.26 in 2023. The most recent forecasts are noticeably more optimistic, with a solid increase in revenue estimates and a lift to earnings per share as well.

Check out our latest analysis for Saras

BIT:SRS Earnings and Revenue Growth March 17th 2023

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of €1.82, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Saras at €2.55 per share, while the most bearish prices it at €1.45. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.6% by the end of 2023. This indicates a significant reduction from annual growth of 2.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 7.1% annually for the foreseeable future. So it's pretty clear that Saras' revenues are expected to shrink 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 next year, expecting improving business conditions. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Saras.

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 Saras going out to 2025, 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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