Growth Investors: Industry Analysts Just Upgraded Their Storebrand ASA (OB:STB) Revenue Forecasts By 54%

Storebrand ASA (OB:STB) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now 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 7.1% over the past week, closing at kr79.86. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the latest consensus from Storebrand's six analysts is for revenues of kr23b in 2023, which would reflect a credible 4.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 11% to kr6.17. Previously, the analysts had been modelling revenues of kr15b and earnings per share (EPS) of kr6.19 in 2023. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

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Even though revenue forecasts increased, there was no change to the consensus price target of kr94.13, suggesting the analysts are focused on earnings as the driver of value creation. 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 Storebrand at kr106 per share, while the most bearish prices it at kr75.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Storebrand shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Storebrand's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 3.1% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Storebrand is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at Storebrand.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Storebrand that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

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.