News Flash: Analysts Just Made A Captivating Upgrade To Their Otovo ASA (OB:OTOVO) Forecasts

Celebrations may be in order for Otovo ASA (OB:OTOVO) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After this upgrade, Otovo's three analysts are now forecasting revenues of kr1.2b in 2023. This would be a sizeable 85% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching kr3.08 per share. Yet before this consensus update, the analysts had been forecasting revenues of kr1.1b and losses of kr3.74 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for Otovo

Yet despite these upgrades, the analysts cut their price target 6.9% to kr27.00, implicitly signalling that the ongoing losses are likely to weigh negatively on Otovo's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Otovo, with the most bullish analyst valuing it at kr28.00 and the most bearish at kr26.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Otovo is an easy business to forecast or the underlying assumptions are obvious.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Otovo's growth to accelerate, with the forecast 85% annualised growth to the end of 2023 ranking favourably alongside historical growth of 40% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Otovo to grow faster than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Otovo is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at Otovo.

Better yet, Otovo is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. You can learn more about these forecasts, for 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.