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Yü Group PLC (LON:YU.) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 80% to UK£2.12 in the last 7 days. Could this upgrade be enough to drive the stock even higher?
Following this upgrade, Yü Group's lone analyst are forecasting 2020 revenues to be UK£100m, approximately in line with the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 41% to UK£0.14. Yet prior to the latest estimates, the analyst had been forecasting revenues of UK£91m and losses of UK£0.16 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analyst administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
Despite these upgrades, the analyst has not made any major changes to their price target of €2.34, implying that their latest estimates don't have a long term impact on what they think the stock is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 1.1% revenue decline a notable change from historical growth of 37% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.7% next year. It's pretty clear that Yü Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analyst reduced their loss per share estimates for this year, reflecting increased optimism around Yü Group's prospects. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Given that the analyst appears to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Yü Group.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for 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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