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Analysts Just Shipped A Meaningful Upgrade To Their DHT Holdings, Inc. (NYSE:DHT) Estimates

Simply Wall St
·3 min read

DHT Holdings, Inc. (NYSE:DHT) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 24% to US$7.95 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the most recent consensus for DHT Holdings from its three analysts is for revenues of US$636m in 2020 which, if met, would be a decent 19% increase on its sales over the past 12 months. Statutory earnings per share are presumed to soar 352% to US$2.32. Before this latest update, the analysts had been forecasting revenues of US$498m and earnings per share (EPS) of US$1.66 in 2020. 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 DHT Holdings

NYSE:DHT Past and Future Earnings March 31st 2020
NYSE:DHT Past and Future Earnings March 31st 2020

Despite these upgrades, the analysts have not made any major changes to their price target of US$8.72, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on DHT Holdings, with the most bullish analyst valuing it at US$11.00 and the most bearish at US$7.10 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 DHT Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 19% revenue growth noticeably faster than its historical growth of 11% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 0.3% per year. It seems obvious that as part of the brighter growth outlook, DHT Holdings is expected 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. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at DHT Holdings.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on DHT Holdings that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.