Upgrade: Analysts Just Made A Substantial Increase To Their M.D.C. Holdings, Inc. (NYSE:MDC) Forecasts

M.D.C. Holdings, Inc. (NYSE:MDC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 9.0% over the past week, closing at US$51.28. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the consensus from six analysts covering M.D.C. Holdings is for revenues of US$4.5b in 2023, implying an uneasy 12% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 6.2% to US$4.99 in the same period. Before this latest update, the analysts had been forecasting revenues of US$4.0b and earnings per share (EPS) of US$3.54 in 2023. 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 M.D.C. Holdings

It will come as no surprise to learn that the analysts have increased their price target for M.D.C. Holdings 18% to US$48.88 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. Currently, the most bullish analyst values M.D.C. Holdings at US$56.00 per share, while the most bearish prices it at US$33.50. 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.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 22% by the end of 2023. This indicates a significant reduction from annual growth of 16% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - M.D.C. Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. 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 M.D.C. Holdings.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple M.D.C. Holdings analysts - going out to 2025, 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.