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Upgrade: Analysts Just Made A Captivating Increase To Their Bunge Limited (NYSE:BG) Forecasts

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·3 min read
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Bunge Limited (NYSE:BG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The stock price has risen 8.2% to US$91.32 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?

After the upgrade, the eight analysts covering Bunge are now predicting revenues of US$51b in 2021. If met, this would reflect a meaningful 13% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to crater 35% to US$9.90 in the same period. Previously, the analysts had been modelling revenues of US$43b and earnings per share (EPS) of US$6.23 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Bunge

earnings-and-revenue-growth
earnings-and-revenue-growth

With these upgrades, we're not surprised to see that the analysts have lifted their price target 11% to US$92.40 per share. 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. The most optimistic Bunge analyst has a price target of US$104 per share, while the most pessimistic values it at US$72.00. 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. For example, we noticed that Bunge's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 17% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 1.0% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 2.9% per year. So it looks like Bunge is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected 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, Bunge could be worth investigating further.

Analysts are definitely bullish on Bunge, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including concerns around earnings quality. You can learn more, and discover the 1 other risk we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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 (at) simplywallst.com.