Industry Analysts Just Made A Sizeable Upgrade To Their FinVolution Group (NYSE:FINV) Revenue Forecasts

Celebrations may be in order for FinVolution Group (NYSE:FINV) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. Investor sentiment seems to be improving too, with the share price up 8.3% to US$4.82 over the past 7 days. 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 FinVolution Group's five analysts is for revenues of CN¥11b in 2022 which - if met - would reflect a satisfactory 6.6% increase on its sales over the past 12 months. Statutory earnings per share are supposed to shrink 7.8% to CN¥7.78 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥9.8b and earnings per share (EPS) of CN¥7.72 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.

Check out our latest analysis for FinVolution Group

It may not be a surprise to see that the analysts have reconfirmed their price target of CN¥39.00, implying that the uplift in sales is not expected to greatly contribute to FinVolution Group'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. Currently, the most bullish analyst values FinVolution Group at CN¥6.40 per share, while the most bearish prices it at CN¥5.19. This is a very narrow spread of estimates, implying either that FinVolution Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the FinVolution Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that FinVolution Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.1% annually. Even after the forecast slowdown in growth, it seems obvious that FinVolution Group is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at FinVolution Group.

Analysts are clearly in love with FinVolution Group at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 1 other warning sign 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.