Analysts Just Made A Captivating Upgrade To Their OKEA ASA (OB:OKEA) Forecasts

Celebrations may be in order for OKEA ASA (OB:OKEA) 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. The market seems to be pricing in some improvement in the business too, with the stock up 8.4% over the past week, closing at kr28.90. Could this big upgrade push the stock even higher?

Following the upgrade, the most recent consensus for OKEA from its three analysts is for revenues of kr9.2b in 2023 which, if met, would be a major 44% increase on its sales over the past 12 months. Per-share earnings are expected to leap 92% to kr12.42. Before this latest update, the analysts had been forecasting revenues of kr8.2b and earnings per share (EPS) of kr11.20 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for OKEA

Despite these upgrades, the consensus price target fell 6.5% to kr48.00, perhaps signalling that the uplift in performance is not expected to last. 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 OKEA at kr55.00 per share, while the most bearish prices it at kr44.00. 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.

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 period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 44% growth on an annualised basis. That is in line with its 49% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues fall 11% per year. So it's clear that not only is revenue growth expected to be maintained, but OKEA is expected to grow meaningfully 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, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, OKEA could be one for the watch list.

Analysts are definitely bullish on OKEA, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including its declining profit margins. For more information, you can click through to our platform to learn more about this and the 2 other flags we've identified .

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.