Industry Analysts Just Made A Sizeable Upgrade To Their Root, Inc. (NASDAQ:ROOT) Revenue Forecasts

Celebrations may be in order for Root, Inc. (NASDAQ:ROOT) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Root will make substantially more sales than they'd previously expected.

After the upgrade, the seven analysts covering Root are now predicting revenues of US$298m in 2023. If met, this would reflect an okay 2.8% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 19% per share from last year to US$11.26. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$270m and losses of US$11.58 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for Root

The consensus price target rose 18% to US$8.50, with the analysts encouraged by the higher revenue and lower forecast losses for this year.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Root's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Root is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.7% annualised growth until the end of 2023. If achieved, this would be a much better result than the 7.7% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.1% per year. So it looks like Root is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Root's prospects. They also upgraded their revenue forecasts, although the latest estimates suggest that Root will grow in line with the overall market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Root.

Analysts are clearly in love with Root at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .

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.