Diaceutics PLC (LON:DXRX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Diaceutics will make substantially more sales than they'd previously expected. Diaceutics has also found favour with investors, with the stock up a notable 25% to UK£0.98 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the most recent consensus for Diaceutics from its three analysts is for revenues of UK£20m in 2022 which, if met, would be a huge 29% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£17m in 2022. The consensus has definitely become more optimistic, showing a chunky increase in revenue forecasts.
The consensus price target rose 10% to UK£1.75, with the analysts clearly more optimistic about Diaceutics' prospects following this update. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Diaceutics, with the most bullish analyst valuing it at UK£2.00 and the most bearish at UK£1.50 per share. This is a very narrow spread of estimates, implying either that Diaceutics is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. The analysts are definitely expecting Diaceutics' growth to accelerate, with the forecast 66% annualised growth to the end of 2022 ranking favourably alongside historical growth of 5.6% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Diaceutics is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting more rapid revenue growth 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 Diaceutics.
Better yet, our automated discounted cash flow calculation (DCF) suggests Diaceutics could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here