Broker Revenue Forecasts For Mercury NZ Limited (NZSE:MCY) Are Surging Higher
Shareholders in Mercury NZ Limited (NZSE:MCY) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Mercury NZ will make substantially more sales than they'd previously expected.
Following this upgrade, Mercury NZ's five analysts are forecasting 2021 revenues to be NZ$1.8b, approximately in line with the last 12 months. Statutory earnings per share are supposed to plummet 24% to NZ$0.14 in the same period. Prior to this update, the analysts had been forecasting revenues of NZ$1.6b and earnings per share (EPS) of NZ$0.14 in 2021. The forecasts seem more optimistic now, with a nice gain to revenue and a small increase to earnings per share estimates.
View our latest analysis for Mercury NZ
Despite these upgrades, the analysts have not made any major changes to their price target of NZ$5.69, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Mercury NZ, with the most bullish analyst valuing it at NZ$7.37 and the most bearish at NZ$4.00 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Mercury NZ's revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2021 being well below the historical 3.9% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 2.2% annually. So it's clear that despite the slowdown in growth, Mercury NZ is still expected to grow meaningfully 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. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Mercury NZ.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Mercury NZ going out to 2025, and you can see them free 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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
