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Shareholders in Audinate Group Limited (ASX:AD8) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Audinate Group has also found favour with investors, with the stock up an impressive 19% to AU$9.84 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 the upgrade, the four analysts covering Audinate Group are now predicting revenues of AU$46m in 2022. If met, this would reflect a sizeable 21% improvement in sales compared to the last 12 months. Losses are forecast to narrow 8.4% to AU$0.052 per share. Yet before this consensus update, the analysts had been forecasting revenues of AU$41m and losses of AU$0.072 per share in 2022. 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 5.2% to AU$10.15, 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 Audinate Group at AU$11.75 per share, while the most bearish prices it at AU$9.00. 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.
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 Audinate Group's rate of growth is expected to accelerate meaningfully, with the forecast 47% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 19% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 22% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Audinate Group to grow faster than the wider industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Audinate Group's prospects. 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, Audinate Group could be worth investigating further.
That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Audinate Group to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.
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.
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