Industry Analysts Just Made A Meaningful Upgrade To Their Atea ASA (OB:ATEA) Revenue Forecasts

Celebrations may be in order for Atea ASA (OB:ATEA) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for next year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the latest upgrade, the current consensus, from the four analysts covering Atea, is for revenues of kr41b in 2023, which would reflect a measurable 5.0% reduction in Atea's sales over the past 12 months. Per-share earnings are expected to rise 9.6% to kr8.48. Previously, the analysts had been modelling revenues of kr32b and earnings per share (EPS) of kr8.52 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

See our latest analysis for Atea

It may not be a surprise to see that the analysts have reconfirmed their price target of kr131, implying that the uplift in sales is not expected to greatly contribute to Atea's valuation in the near term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Atea analyst has a price target of kr150 per share, while the most pessimistic values it at kr117. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Atea is an easy business to forecast or the underlying assumptions are obvious.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 4.0% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 4.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.6% per year. It's pretty clear that Atea's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. 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 Atea.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Atea that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology 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.