New Forecasts: Here's What Analysts Think The Future Holds For Clearfield, Inc. (NASDAQ:CLFD)

Celebrations may be in order for Clearfield, Inc. (NASDAQ:CLFD) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Clearfield too, with the stock up 26% to US$120 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the latest consensus from Clearfield's four analysts is for revenues of US$384m in 2023, which would reflect a major 42% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 24% to US$4.44. Before this latest update, the analysts had been forecasting revenues of US$303m and earnings per share (EPS) of US$3.55 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Our analysis indicates that CLFD is potentially overvalued!

It will come as no surprise to learn that the analysts have increased their price target for Clearfield 12% to US$130 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. Currently, the most bullish analyst values Clearfield at US$135 per share, while the most bearish prices it at US$120. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Clearfield's past performance and to peers in the same industry. The analysts are definitely expecting Clearfield's growth to accelerate, with the forecast 42% annualised growth to the end of 2023 ranking favourably alongside historical growth of 26% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.4% 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 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better 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.

Analysts are clearly in love with Clearfield at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as recent substantial insider selling. You can learn more, and discover the 2 other concerns we've identified, for 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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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.