New Forecasts: Here's What Analysts Think The Future Holds For RADA Electronic Industries Ltd. (NASDAQ:RADA)

RADA Electronic Industries Ltd. (NASDAQ:RADA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The stock price has risen 8.5% to US$9.55 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 most recent consensus for RADA Electronic Industries from its three analysts is for revenues of US$118m in 2021 which, if met, would be a substantial 76% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 250% to US$0.23. Before this latest update, the analysts had been forecasting revenues of US$108m and earnings per share (EPS) of US$0.23 in 2021. The most recent forecasts are noticeably more optimistic, with a decent improvement in revenue estimates and a lift to earnings per share as well.

See our latest analysis for RADA Electronic Industries

It will come as no surprise to learn that the analysts have increased their price target for RADA Electronic Industries 9.5% to US$11.50 on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on RADA Electronic Industries, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$9.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 RADA Electronic Industries' growth to accelerate, with the forecast 76% growth ranking favourably alongside historical growth of 33% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.2% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect RADA Electronic Industries to grow faster than the wider industry.

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 next year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better 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. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at RADA Electronic Industries.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for RADA Electronic Industries going out to 2022, and you can see them free on our platform here..

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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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