Just In: One Analyst Has Become A Lot More Bullish On Fractal Gaming Group AB (publ)'s (STO:FRACTL) Earnings

Shareholders in Fractal Gaming Group AB (publ) (STO:FRACTL) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analyst modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 4.7% over the past week, closing at kr51.60. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the consensus from single analyst covering Fractal Gaming Group is for revenues of kr637m in 2021, implying a discernible 3.5% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to dip 5.6% to kr1.81 in the same period. Previously, the analyst had been modelling revenues of kr561m and earnings per share (EPS) of kr1.20 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.

Check out our latest analysis for Fractal Gaming Group

Although the analyst has upgraded their earnings estimates, there was no change to the consensus price target of kr55.00, suggesting that the forecast performance does not have a long term impact on the company's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.7% by the end of 2021. This indicates a significant reduction from annual growth of 42% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fractal Gaming Group is expected to lag the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that the analyst upgraded their earnings per share estimates for this year, expecting improving business conditions. Pleasantly, the analyst also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Fractal Gaming Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts 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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