Analysts Just Published A Bright New Outlook For Banca Transilvania S.A.'s (BVB:TLV)

Banca Transilvania S.A. (BVB:TLV) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investor sentiment seems to be improving too, with the share price up 6.5% to RON2.31 over the past 7 days. Could this big upgrade push the stock even higher?

Following the upgrade, the current consensus from Banca Transilvania's three analysts is for revenues of RON4.7b in 2021 which - if met - would reflect a major 23% increase on its sales over the past 12 months. Statutory earnings per share are presumed to bounce 25% to RON0.28. Before this latest update, the analysts had been forecasting revenues of RON4.0b and earnings per share (EPS) of RON0.18 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

See our latest analysis for Banca Transilvania

It will come as no surprise to learn that the analysts have increased their price target for Banca Transilvania 5.2% to RON2.43 on the back of these upgrades. 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. There are some variant perceptions on Banca Transilvania, with the most bullish analyst valuing it at RON3.00 and the most bearish at RON2.15 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 Banca Transilvania shareholders.

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. It's clear from the latest estimates that Banca Transilvania's rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 15% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Banca Transilvania to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Banca Transilvania.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Banca Transilvania that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

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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