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UP Global Sourcing Holdings plc (LON:UPGS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that UP Global Sourcing Holdings will make substantially more sales than they'd previously expected. UP Global Sourcing Holdings has also found favour with investors, with the stock up a worthy 11% to UK£0.69 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the consensus from twin analysts covering UP Global Sourcing Holdings is for revenues of UK£105m in 2020, implying an uncomfortable 16% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing UK£92m of revenue in 2020. The consensus has definitely become more optimistic, showing a nice gain to revenue forecasts.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 16%, a significant reduction from annual growth of 7.0% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 0.9% annually for the foreseeable future. The forecasts do look bearish for UP Global Sourcing Holdings, since they're expecting it to shrink faster than the industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for UP Global Sourcing Holdings this year. The analysts also expect revenues to shrink faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at UP Global Sourcing Holdings.
Better yet, our automated discounted cash flow calculation (DCF) suggests UP Global Sourcing Holdings could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
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