Forecast: Analysts Think Kitron ASA's (OB:KIT) Business Prospects Have Improved Drastically

Kitron ASA (OB:KIT) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Kitron has also found favour with investors, with the stock up an impressive 15% to kr40.40 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After this upgrade, Kitron's twin analysts are now forecasting revenues of €9.1b in 2023. This would be a huge improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 1,611% to €2.95. Before this latest update, the analysts had been forecasting revenues of €7.3b and earnings per share (EPS) of €1.86 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Kitron

With these upgrades, we're not surprised to see that the analysts have lifted their price target 14% to kr41.00 per share. 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 Kitron, with the most bullish analyst valuing it at kr50.00 and the most bearish at kr32.00 per share. 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 Kitron shareholders.

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 analysts are definitely expecting Kitron's growth to accelerate, with the forecast 30x annualised growth to the end of 2023 ranking favourably alongside historical growth of 17% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Kitron to grow 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Kitron.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

We also provide an overview of the Kitron Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.