Forecast: Analysts Think Clearfield, Inc.'s (NASDAQ:CLFD) Business Prospects Have Improved Drastically

Clearfield, Inc. (NASDAQ:CLFD) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Clearfield has also found favour with investors, with the stock up an unbelievable 30% to US$104 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After the upgrade, the three analysts covering Clearfield are now predicting revenues of US$300m in 2023. If met, this would reflect a huge 35% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 23% to US$3.55. Previously, the analysts had been modelling revenues of US$245m and earnings per share (EPS) of US$3.08 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Clearfield

It will come as no surprise to learn that the analysts have increased their price target for Clearfield 26% to US$103 on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Clearfield analyst has a price target of US$110 per share, while the most pessimistic values it at US$95.00. This is a very narrow spread of estimates, implying either that Clearfield is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Clearfield's rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 21% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Clearfield to grow faster than 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 next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Clearfield could be worth investigating further.

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 Clearfield going out to 2024, 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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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.