Swedencare AB (publ) (STO:SECARE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Swedencare will make substantially more sales than they'd previously expected. Swedencare has also found favour with investors, with the stock up an impressive 18% to kr115 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
After the upgrade, the two analysts covering Swedencare are now predicting revenues of kr722m in 2021. If met, this would reflect a major 115% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 89% to kr1.36. Prior to this update, the analysts had been forecasting revenues of kr647m and earnings per share (EPS) of kr1.30 in 2021. The most recent forecasts are noticeably more optimistic, with a nice gain to revenue estimates and a lift to earnings per share as well.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 14% to kr140 per share.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Swedencare's growth to accelerate, with the forecast 177% annualised growth to the end of 2021 ranking favourably alongside historical growth of 35% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 30% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Swedencare 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 this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Swedencare.
Better yet, our automated discounted cash flow calculation (DCF) suggests Swedencare could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
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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