New Forecasts: Here's What Analysts Think The Future Holds For HMS Networks AB (publ) (STO:HMS)

Shareholders in HMS Networks AB (publ) (STO:HMS) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the upgrade, the most recent consensus for HMS Networks from its three analysts is for revenues of kr3.1b in 2024 which, if met, would be an okay 3.0% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 23% to kr10.15 in the same period. Before this latest update, the analysts had been forecasting revenues of kr2.8b and earnings per share (EPS) of kr10.24 in 2024. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

See our latest analysis for HMS Networks

Analysts increased their price target 13% to kr478, perhaps signalling that higher revenues are a strong leading indicator for HMS Networks's valuation.

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. It's pretty clear that there is an expectation that HMS Networks' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.4% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that HMS Networks is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower 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 HMS Networks.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for HMS Networks going out to 2026, and you can see them free on our platform here..

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.