Forecast: Analysts Think Malaysia Smelting Corporation Berhad's (KLSE:MSC) Business Prospects Have Improved Drastically

Celebrations may be in order for Malaysia Smelting Corporation Berhad (KLSE:MSC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 25% to RM5.00 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the upgrade, the most recent consensus for Malaysia Smelting Corporation Berhad from its twin analysts is for revenues of RM2.1b in 2022 which, if met, would be a major 96% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 55% to RM0.44. Prior to this update, the analysts had been forecasting revenues of RM1.6b and earnings per share (EPS) of RM0.36 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 Malaysia Smelting Corporation Berhad

With these upgrades, we're not surprised to see that the analysts have lifted their price target 10% to RM3.39 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. Currently, the most bullish analyst values Malaysia Smelting Corporation Berhad at RM4.45 per share, while the most bearish prices it at RM2.32. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Malaysia Smelting Corporation Berhad's past performance and to peers in the same industry. For example, we noticed that Malaysia Smelting Corporation Berhad's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 96% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 12% a year 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 9.6% per year. Not only are Malaysia Smelting Corporation Berhad'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 analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Malaysia Smelting Corporation Berhad could be worth investigating further.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with Malaysia Smelting Corporation Berhad, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other concerns we've identified .

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.