Analysts Are Betting On Mercury NZ Limited (NZSE:MCY) With A Big Upgrade This Week

Celebrations may be in order for Mercury NZ Limited (NZSE:MCY) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the upgrade, the most recent consensus for Mercury NZ from its four analysts is for revenues of NZ$2.2b in 2023 which, if met, would be a notable 12% increase on its sales over the past 12 months. Statutory earnings per share are supposed to nosedive 54% to NZ$0.15 in the same period. Prior to this update, the analysts had been forecasting revenues of NZ$2.0b and earnings per share (EPS) of NZ$0.14 in 2023. The forecasts seem more optimistic now, with a nice gain to revenue and a slight bump in earnings per share estimates.

View our latest analysis for Mercury NZ

Despite these upgrades, the analysts have not made any major changes to their price target of NZ$6.17, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Mercury NZ at NZ$7.30 per share, while the most bearish prices it at NZ$4.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 11% annual growth over the past year. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues fall 1.4% per year. So not only is Mercury NZ expected to maintain its revenue growth despite the wider downturn, it's also forecast to grow faster than the industry as a whole.

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. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Mercury NZ.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential risks with Mercury NZ, including dilutive stock issuance over the past year. You can learn more, and discover the 2 other risks we've identified, for 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.