Industry Analysts Just Made A Meaningful Upgrade To Their Compass, Inc. (NYSE:COMP) Revenue Forecasts

By
Simply Wall St
Published
August 11, 2021
NYSE:COMP
Source: Shutterstock

Shareholders in Compass, Inc. (NYSE:COMP) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Compass will make substantially more sales than they'd previously expected. Compass has also found favour with investors, with the stock up a worthy 21% to US$16.32 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the upgrade, the most recent consensus for Compass from its six analysts is for revenues of US$6.3b in 2021 which, if met, would be a notable 15% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 44% to US$1.84. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$5.5b and losses of US$1.91 per share in 2021. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

See our latest analysis for Compass

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NYSE:COMP Earnings and Revenue Growth August 12th 2021

There was no major change to the consensus price target of US$22.71, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. 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 Compass analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$17.00. 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 Compass shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Compass' revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2021 being well below the historical 80% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 12% per year. Even after the forecast slowdown in growth, it seems obvious that Compass is also expected to grow faster than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Compass is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Compass.

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 Compass going out to 2023, 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.

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