Genetic Signatures Limited (ASX:GSS) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
After the upgrade, the solo analyst covering Genetic Signatures is now predicting revenues of AU$14m in 2020. If met, this would reflect a major 87% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 55% to AU$0.017. However, before this estimates update, the consensus had been expecting revenues of AU$12m and AU$0.025 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analyst administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
It will come as no surprise to learn that the analyst has increased their price target for Genetic Signatures 33% to AU$3.45 on the back of these upgrades.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Genetic Signatures' rate of growth is expected to accelerate meaningfully, with the forecast 87% revenue growth noticeably faster than its historical growth of 24% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Genetic Signatures is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analyst reduced their loss per share estimates for this year, reflecting increased optimism around Genetic Signatures' prospects. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Genetic Signatures.
That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Genetic Signatures 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.
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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