Virtu Financial, Inc. (NASDAQ:VIRT) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
Following the upgrade, the current consensus from Virtu Financial's nine analysts is for revenues of US$1.3b in 2020 which - if met - would reflect a decent 9.2% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.2b in 2020. The consensus has definitely become more optimistic, showing a nice gain to revenue forecasts.
Additionally, the consensus price target for Virtu Financial increased 5.2% to US$23.15, showing a clear increase in optimism from the analysts involved. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Virtu Financial at US$29.00 per share, while the most bearish prices it at US$18.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Virtu Financial shareholders.
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 pretty clear that there is an expectation that Virtu Financial's revenue growth will slow down substantially, with revenues next year expected to grow 9.2%, compared to a historical growth rate of 17% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.7% next year. So it's pretty clear that, while Virtu Financial's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Virtu Financial could be worth investigating further.
Unanswered questions? At least one of Virtu Financial's nine analysts has provided estimates out to 2022, which can be seen for free on our platform here.
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