News Flash: Analysts Just Made A Notable Upgrade To Their Reach Subsea ASA (OB:REACH) Forecasts

Reach Subsea ASA (OB:REACH) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's forecasts. 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. Reach Subsea has also found favour with investors, with the stock up a remarkable 10% to kr4.36 over the past week. Could this upgrade be enough to drive the stock even higher?

After this upgrade, Reach Subsea's single analyst is now forecasting revenues of kr1.8b in 2023. This would be a decent 15% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to sink 11% to kr0.54 in the same period. Prior to this update, the analyst had been forecasting revenues of kr1.5b and earnings per share (EPS) of kr0.31 in 2023. 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.

View our latest analysis for Reach Subsea

Although the analyst has upgraded their earnings estimates, there was no change to the consensus price target of US$0.56, suggesting that the forecast performance does not have a long term impact on the company's valuation.

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. The analyst is definitely expecting Reach Subsea's growth to accelerate, with the forecast 33% annualised growth to the end of 2023 ranking favourably alongside historical growth of 18% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Reach Subsea is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that the analyst upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Reach Subsea.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Reach Subsea going out as far as 2025, 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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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.