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Need To Know: Analysts Are Much More Bullish On Virtu Financial, Inc. (NASDAQ:VIRT)

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 analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

After the upgrade, the nine analysts covering Virtu Financial are now predicting revenues of US$2.1b in 2020. If met, this would reflect a solid 11% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 173% to US$3.90. Prior to this update, the analysts had been forecasting revenues of US$1.5b and earnings per share (EPS) of US$2.21 in 2020. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Virtu Financial

NasdaqGS:VIRT Past and Future Earnings May 11th 2020
NasdaqGS:VIRT Past and Future Earnings May 11th 2020

It will come as no surprise to learn that the analysts have increased their price target for Virtu Financial 9.9% to US$27.23 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Virtu Financial analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$22.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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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 11%, compared to a historical growth rate of 20% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.8% next year. Even after the forecast slowdown in growth, it seems obvious that Virtu Financial is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Virtu Financial.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Virtu Financial analysts - going out to 2022, 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.