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Industry Analysts Just Made A Sizeable Upgrade To Their Ebix, Inc. (NASDAQ:EBIX) Revenue Forecasts

Simply Wall St
·4 min read

Ebix, Inc. (NASDAQ:EBIX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Ebix has also found favour with investors, with the stock up an unbelievable 43% to US$27.68 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After this upgrade, Ebix's two analysts are now forecasting revenues of US$695m in 2021. This would be a substantial 26% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 37% to US$4.26. Previously, the analysts had been modelling revenues of US$611m and earnings per share (EPS) of US$4.25 in 2021. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for Ebix

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earnings-and-revenue-growth

It may not be a surprise to see that the analysts have reconfirmed their price target of US$54.50, implying that the uplift in sales is not expected to greatly contribute to Ebix's valuation in the near term. 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 Ebix analyst has a price target of US$75.00 per share, while the most pessimistic values it at US$34.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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 Ebix's rate of growth is expected to accelerate meaningfully, with the forecast 26% revenue growth noticeably faster than its historical growth of 18% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ebix is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Ebix.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Ebix going out as far as 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.