ViTrox Corporation Berhad (KLSE:VITROX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. ViTrox Corporation Berhad has also found favour with investors, with the stock up a noteworthy 14% to RM18.96 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the latest consensus from ViTrox Corporation Berhad's nine analysts is for revenues of RM635m in 2021, which would reflect an okay 4.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 16% to RM0.35. Prior to this update, the analysts had been forecasting revenues of RM572m and earnings per share (EPS) of RM0.31 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 15% to RM18.38 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values ViTrox Corporation Berhad at RM23.28 per share, while the most bearish prices it at RM11.20. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that ViTrox Corporation Berhad's revenue growth is expected to slow, with the forecast 5.7% annualised growth rate until the end of 2021 being well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than ViTrox Corporation Berhad.
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. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at ViTrox Corporation 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 ViTrox Corporation Berhad analysts - going out to 2023, 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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