News Flash: Analysts Just Made A Sizeable Upgrade To Their PropNex Limited (SGX:OYY) Forecasts

Celebrations may be in order for PropNex Limited (SGX:OYY) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 9.1% over the past week, closing at S$1.20. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After the upgrade, the three analysts covering PropNex are now predicting revenues of S$631m in 2021. If met, this would reflect a credible 4.9% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be S$0.099, approximately in line with the last 12 months. Prior to this update, the analysts had been forecasting revenues of S$514m and earnings per share (EPS) of S$0.077 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for PropNex

It will come as no surprise to learn that the analysts have increased their price target for PropNex 14% to S$1.03 on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic PropNex analyst has a price target of S$1.34 per share, while the most pessimistic values it at S$0.85. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await PropNex shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that PropNex's revenue growth is expected to slow, with the forecast 4.9% annualised growth rate until the end of 2021 being well below the historical 12% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that PropNex is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at PropNex.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for PropNex going out to 2023, 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. 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.
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