Analysts Just Published A Bright New Outlook For Sarawak Oil Palms Berhad's (KLSE:SOP)

Sarawak Oil Palms Berhad (KLSE:SOP) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Sarawak Oil Palms Berhad too, with the stock up 20% to RM6.29 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 this upgrade, Sarawak Oil Palms Berhad's four analysts are now forecasting revenues of RM4.8b in 2022. This would be a credible 7.5% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to descend 19% to RM0.72 in the same period. Previously, the analysts had been modelling revenues of RM3.4b and earnings per share (EPS) of RM0.48 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Sarawak Oil Palms Berhad

With these upgrades, we're not surprised to see that the analysts have lifted their price target 18% to RM5.67 per share. 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 Sarawak Oil Palms Berhad, with the most bullish analyst valuing it at RM6.35 and the most bearish at RM4.60 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. One thing stands out from these estimates, which is that Sarawak Oil Palms Berhad is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.5% annualised growth until the end of 2022. If achieved, this would be a much better result than the 8.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 0.08% per year. So it looks like Sarawak Oil Palms Berhad is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Sarawak Oil Palms Berhad.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sarawak Oil Palms Berhad analysts - going out to 2024, 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. 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.