HeadHunter Group PLC (NASDAQ:HHR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. 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 4.9% over the past week, closing at US$50.89. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
After the upgrade, the 14 analysts covering HeadHunter Group are now predicting revenues of ₽14b in 2021. If met, this would reflect a huge 25% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 32% to ₽87.65. Prior to this update, the analysts had been forecasting revenues of ₽13b and earnings per share (EPS) of ₽66.71 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.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 9.5% to ₽3,530 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values HeadHunter Group at ₽62.24 per share, while the most bearish prices it at ₽29.13. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
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 HeadHunter Group's growth to accelerate, with the forecast 56% annualised growth to the end of 2021 ranking favourably alongside historical growth of 20% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that HeadHunter Group is expected to grow much faster than its 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 this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at HeadHunter Group.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on HeadHunter Group that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.
We also provide an overview of the HeadHunter Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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.
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