Industry Analysts Just Made A Meaningful Upgrade To Their RADA Electronic Industries Ltd. (NASDAQ:RADA) Revenue Forecasts
RADA Electronic Industries Ltd. (NASDAQ:RADA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The market seems to be pricing in some improvement in the business too, with the stock up 8.5% over the past week, closing at US$9.55. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
After the upgrade, the three analysts covering RADA Electronic Industries are now predicting revenues of US$118m in 2021. If met, this would reflect a major 76% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 250% to US$0.23. Previously, the analysts had been modelling revenues of US$108m and earnings per share (EPS) of US$0.23 in 2021. The forecasts seem more optimistic now, with a solid increase in revenue and a small increase to earnings per share estimates.
See our latest analysis for RADA Electronic Industries
It will come as no surprise to learn that the analysts have increased their price target for RADA Electronic Industries 9.5% to US$11.50 on the back of these upgrades. 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 RADA Electronic Industries, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$9.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's clear from the latest estimates that RADA Electronic Industries' rate of growth is expected to accelerate meaningfully, with the forecast 76% revenue growth noticeably faster than its historical growth of 33% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.2% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that RADA Electronic Industries 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 next year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better 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 RADA Electronic Industries.
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 RADA Electronic Industries going out to 2022, and you can see them free on our platform here..
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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