Analysts Are Betting On Discovery Limited (JSE:DSY) With A Big Upgrade This Week

Discovery Limited (JSE:DSY) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Discovery will make substantially more sales than they'd previously expected. The stock price has risen 4.1% to R136 over the past week, suggesting investors are becoming more optimistic. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the latest upgrade, the four analysts covering Discovery provided consensus estimates of R70b revenue in 2024, which would reflect a stressful 20% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of R54b in 2024. It looks like there's been a clear increase in optimism around Discovery, given the considerable lift to revenue forecasts.

See our latest analysis for Discovery

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There was no particular change to the consensus price target of R180, with Discovery's latest outlook seemingly not enough to result in a change of valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Discovery's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 20% by the end of 2024. This indicates a significant reduction from annual growth of 8.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 14% annually for the foreseeable future. So it's pretty clear that Discovery's revenues are expected to shrink faster than the wider 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 for revenues to shrink at a quicker rate than companies in 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 Discovery.

Unanswered questions? We have analyst estimates for Discovery going out to 2026, and you can see them 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.

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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.