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PagSeguro Digital Ltd. (NYSE:PAGS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. Investors have been pretty optimistic on PagSeguro Digital too, with the stock up 21% to R$31.73 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
After this upgrade, PagSeguro Digital's 13 analysts are now forecasting revenues of R$6.3b in 2020. This would be a substantial 70% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 5.8% to R$4.52. Prior to this update, the analysts had been forecasting revenues of R$5.6b and earnings per share (EPS) of R$4.12 in 2020. The most recent forecasts are noticeably more optimistic, with a solid increase in revenue estimates and a lift to earnings per share as well.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of R$174, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on PagSeguro Digital, with the most bullish analyst valuing it at R$39.27 and the most bearish at R$19.63 per share. 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. It's clear from the latest estimates that PagSeguro Digital's rate of growth is expected to accelerate meaningfully, with the forecast 70% revenue growth noticeably faster than its historical growth of 40% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that PagSeguro Digital is expected to grow much faster than its 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at PagSeguro Digital.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for PagSeguro Digital 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. 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. Thank you for reading.