Analyst Forecasts For PledPharma AB (publ) (STO:PLED) Are Surging Higher

PledPharma AB (publ) (STO:PLED) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 25% to kr6.63 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

After the upgrade, the dual analysts covering PledPharma are now predicting revenues of kr145m in 2021. If met, this would reflect a major 174% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of kr0.56 per share next year. However, before this estimates update, the consensus had been expecting revenues of kr117m and kr0.49 per share in losses. It looks like there's been a definite improvement in business conditions, with a revenue upgrade supposed to lead to profitability sooner than previously forecast.

Check out our latest analysis for PledPharma

As a result, it might be a surprise to see that the analysts have cut their price target 31% to kr9.00, which could suggest the forecast improvement in performance is not expected to last.

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 PledPharma's rate of growth is expected to accelerate meaningfully, with the forecast 174% revenue growth noticeably faster than its historical growth of 38% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that PledPharma is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that there is now an expectation for PledPharma to become profitable next year, compared to previous expectations of a loss. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, PledPharma could be one for the watch list.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for PledPharma going out as far as 2022, 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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