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Shareholders in NewRiver REIT plc (LON:NRR) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The stock price has risen 6.0% to UK£0.87 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
After the upgrade, the consensus from NewRiver REIT's three analysts is for revenues of UK£90m in 2022, which would reflect a discernible 4.2% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing UK£68m of revenue in 2022. It looks like there's been a clear increase in optimism around NewRiver REIT, given the very substantial lift in revenue forecasts.
Additionally, the consensus price target for NewRiver REIT increased 7.6% to UK£1.01, showing a clear increase in optimism from the analysts involved. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic NewRiver REIT analyst has a price target of UK£1.30 per share, while the most pessimistic values it at UK£0.70. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 4.2% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 9.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. It's pretty clear that NewRiver REIT's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for NewRiver REIT this year. They're also anticipating slower revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at NewRiver REIT.
It's great to see the analysts upgrading their estimates, but the biggest highlight to us is that the business is expected to become profitable in the foreseeable future. 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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