Evolution Gaming Group AB (publ) (STO:EVO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
After the upgrade, the six analysts covering Evolution Gaming Group are now predicting revenues of €849m in 2021. If met, this would reflect a substantial 73% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of €767m in 2021. The consensus has definitely become more optimistic, showing a solid increase in revenue forecasts.
There was no particular change to the consensus price target of €85.41, with Evolution Gaming Group's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Evolution Gaming Group, with the most bullish analyst valuing it at €992 and the most bearish at €705 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Evolution Gaming Group's growth to accelerate, with the forecast 73% growth ranking favourably alongside historical growth of 36% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Evolution Gaming Group to grow faster than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Evolution Gaming Group next year. Analysts also expect revenues to grow faster than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at Evolution Gaming Group.
Want more information? At least one of Evolution Gaming Group's six analysts has provided estimates out to 2023, which can be seen 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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