Analysts Are Betting On BRC Asia Limited (SGX:BEC) With A Big Upgrade This Week

Celebrations may be in order for BRC Asia Limited (SGX:BEC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that BRC Asia will make substantially more sales than they'd previously expected. The stock price has risen 4.7% to S$1.56 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the current consensus from BRC Asia's three analysts is for revenues of S$1.2b in 2022 which - if met - would reflect a sizeable 26% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 72% to S$0.18. Previously, the analysts had been modelling revenues of S$999m and earnings per share (EPS) of S$0.19 in 2022. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for BRC Asia

It may not be a surprise to see that the analysts have reconfirmed their price target of S$1.90, implying that the uplift in sales is not expected to greatly contribute to BRC Asia's valuation in the near term. 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. The most optimistic BRC Asia analyst has a price target of S$2.10 per share, while the most pessimistic values it at S$1.76. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BRC Asia's past performance and to peers in the same industry. It's clear from the latest estimates that BRC Asia's rate of growth is expected to accelerate meaningfully, with the forecast 26% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 21% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that BRC Asia is expected to grow much faster than its industry.

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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at BRC Asia.

Analysts are definitely bullish on BRC Asia, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we've identified .

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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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.