Analysts Just Made A Significant Upgrade To Their Mainfreight Limited (NZSE:MFT) Forecasts

Shareholders in Mainfreight Limited (NZSE:MFT) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 5.9% over the past week, closing at NZ$82.00. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the current consensus from Mainfreight's four analysts is for revenues of NZ$4.4b in 2022 which - if met - would reflect a substantial 25% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 36% to NZ$2.54. Previously, the analysts had been modelling revenues of NZ$4.0b and earnings per share (EPS) of NZ$2.25 in 2022. 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 Mainfreight

With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.0% to NZ$85.80 per share. 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 Mainfreight at NZ$89.60 per share, while the most bearish prices it at NZ$83.61. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

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 Mainfreight's growth to accelerate, with the forecast 25% annualised growth to the end of 2022 ranking favourably alongside historical growth of 9.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Mainfreight 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Mainfreight could be worth investigating further.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Mainfreight going out to 2024, and you can see them free on our platform here..

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. 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.
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