Upgrade: Analysts Just Made A Substantial Increase To Their Sharps Compliance Corp. (NASDAQ:SMED) Forecasts

Sharps Compliance Corp. (NASDAQ:SMED) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory 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 7.0% over the past week, closing at US$12.81. Could this big upgrade push the stock even higher?

Following the upgrade, the current consensus from Sharps Compliance's five analysts is for revenues of US$74m in 2021 which - if met - would reflect a huge 39% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 256% to US$0.34. Prior to this update, the analysts had been forecasting revenues of US$63m and earnings per share (EPS) of US$0.15 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.

Check out our latest analysis for Sharps Compliance

With these upgrades, we're not surprised to see that the analysts have lifted their price target 22% to US$14.60 per share. 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. There are some variant perceptions on Sharps Compliance, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$13.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Sharps Compliance shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Sharps Compliance's growth to accelerate, with the forecast 39% growth ranking favourably alongside historical growth of 9.9% 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 7.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sharps Compliance 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Sharps Compliance.

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 Sharps Compliance 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.

When trading Sharps Compliance or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.