Analysts Just Made A Huge Upgrade To Their Markel Corporation (NYSE:MKL) Forecasts

Celebrations may be in order for Markel Corporation (NYSE:MKL) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The stock price has risen 4.2% to US$1,257 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?

Following the latest upgrade, the current consensus, from the four analysts covering Markel, is for revenues of US$12b in 2021, which would reflect a discernible 6.5% reduction in Markel's sales over the past 12 months. Statutory earnings per share are supposed to nosedive 30% to US$133 in the same period. Previously, the analysts had been modelling revenues of US$11b and earnings per share (EPS) of US$84.12 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 Markel

Despite these upgrades, the analysts have not made any major changes to their price target of US$1,317, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic Markel analyst has a price target of US$1,450 per share, while the most pessimistic values it at US$1,096. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 12% by the end of 2021. This indicates a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Markel 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. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Markel.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Markel analysts - going out to 2023, and you can see them 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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