Need To Know: Analysts Are Much More Bullish On LPP SA (WSE:LPP)

Shareholders in LPP SA (WSE:LPP) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 32% to zł17,930 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

After this upgrade, LPP's twelve analysts are now forecasting revenues of zł16b in 2023. This would be a major 37% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to rise 9.7% to zł630. Prior to this update, the analysts had been forecasting revenues of zł15b and earnings per share (EPS) of zł488 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 LPP

It will come as no surprise to learn that the analysts have increased their price target for LPP 22% to zł17,110 on the back of these upgrades. 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. Currently, the most bullish analyst values LPP at zł24,778 per share, while the most bearish prices it at zł7,640. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the LPP's past performance and to peers in the same industry. It's clear from the latest estimates that LPP's rate of growth is expected to accelerate meaningfully, with the forecast 28% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that LPP is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next 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, LPP could be worth investigating further.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for LPP going out to 2024, and you can see them 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.