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Celebrations may be in order for Camtek Ltd. (NASDAQ:CAMT) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 5.8% over the past week, closing at US$27.28. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.
Following the upgrade, the latest consensus from Camtek's four analysts is for revenues of US$205m in 2021, which would reflect a sizeable 46% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 71% to US$0.82. Before this latest update, the analysts had been forecasting revenues of US$162m and earnings per share (EPS) of US$0.66 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 17% to US$28.00 per share. 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. The most optimistic Camtek analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$19.00. 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.
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 Camtek's rate of growth is expected to accelerate meaningfully, with the forecast 46% revenue growth noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.3% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Camtek is expected to grow much faster than its 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. Fortunately, analysts 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 Camtek.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Camtek going out to 2022, 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.
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