Industry Analysts Just Upgraded Their Digital360 S.p.A. (BIT:DIG) Revenue Forecasts By 12%

Digital360 S.p.A. (BIT:DIG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Digital360 will make substantially more sales than they'd previously expected.

Following the upgrade, the current consensus from Digital360's three analysts is for revenues of €52m in 2022 which - if met - would reflect a substantial 45% increase on its sales over the past 12 months. Per-share earnings are expected to soar 68% to €0.15. Previously, the analysts had been modelling revenues of €46m and earnings per share (EPS) of €0.16 in 2022. While revenue forecasts have increased, the analysts if anything seem a little more pessimistic, given the small dip in earnings per share estimates in this update.

See our latest analysis for Digital360

There's been no major changes to analyst price target of €5.94, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Digital360, with the most bullish analyst valuing it at €6.20 and the most bearish at €5.54 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Digital360 is an easy business to forecast or the underlying assumptions are obvious.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Digital360's rate of growth is expected to accelerate meaningfully, with the forecast 45% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 19% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Digital360 is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster 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 Digital360.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Digital360 going out to 2024, and you can see them 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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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.