Broker Revenue Forecasts For ACEA S.p.A. (BIT:ACE) Are Surging Higher

ACEA S.p.A. (BIT:ACE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

After this upgrade, ACEA's four analysts are now forecasting revenues of €5.1b in 2022. This would be a major 24% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be €1.57, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of €4.4b and earnings per share (EPS) of €1.48 in 2022. Sentiment certainly seems to have improved in recent times, with a decent improvement in revenue and a modest lift to earnings per share estimates.

View our latest analysis for ACEA

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of €20.63, suggesting that the forecast performance does not have a long term impact on the company's 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. The most optimistic ACEA analyst has a price target of €22.50 per share, while the most pessimistic values it at €17.20. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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 ACEA's rate of growth is expected to accelerate meaningfully, with the forecast 33% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 7.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect ACEA to grow faster 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 this year, expecting improving 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 ACEA.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on ACEA that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

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. 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.