Sezzle Inc. (ASX:SZL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Sezzle has also found favour with investors, with the stock up a magnificent 67% to US$6.95 over the past week. Could this upgrade be enough to drive the stock even higher?
Following the upgrade, the most recent consensus for Sezzle from its twin analysts is for revenues of US$52m in 2020 which, if met, would be a major 222% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 37% to US$0.093. Yet before this consensus update, the analysts had been forecasting revenues of US$46m and losses of US$0.10 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
The consensus price target rose 69% to US$3.98, with the analysts encouraged by the higher revenue and lower forecast losses for this year. 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. Currently, the most bullish analyst values Sezzle at US$5.95 per share, while the most bearish prices it at US$5.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sezzle is an easy business to forecast or the underlying assumptions are obvious.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Sezzle's revenue growth is expected to slow, with forecast 222% increase next year well below the historical 884% 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) 37% next year. So it's pretty clear that, while Sezzle's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Sezzle 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. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Sezzle.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Sezzle going out as far as 2022, 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.
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.
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