Growth Investors: Industry Analysts Just Upgraded Their Mesa Laboratories, Inc. (NASDAQ:MLAB) Revenue Forecasts By 14%

Mesa Laboratories, Inc. (NASDAQ:MLAB) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

After the upgrade, the four analysts covering Mesa Laboratories are now predicting revenues of US$229m in 2023. If met, this would reflect a huge 40% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 88% to US$2.70. Previously, the analysts had been modelling revenues of US$201m and earnings per share (EPS) of US$2.66 in 2023. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

View our latest analysis for Mesa Laboratories

As a result, it might come as a surprise that the consensus price target has been cut 9.1% to US$298, which could suggest that these earnings are considered less valuable by the market than previously. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Mesa Laboratories, with the most bullish analyst valuing it at US$345 and the most bearish at US$255 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Mesa Laboratories' growth to accelerate, with the forecast 31% annualised growth to the end of 2023 ranking favourably alongside historical growth of 11% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Mesa Laboratories 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 next year, and sales are expected to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Mesa Laboratories.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential flags with Mesa Laboratories, including dilutive stock issuance over the past year. You can learn more, and discover the 3 other flags we've identified, for free on our platform here.

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.