Yahoo Finance Party Time: Brokers Just Made Major Increases To Their 3i Group plc (LON:III) Earnings Forecasts
Shareholders in 3i Group plc (LON:III) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
Following the upgrade, the most recent consensus for 3i Group from its five analysts is for revenues of UK£1.6b in 2021 which, if met, would be a major 396% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 542% to UK£1.42. Before this latest update, the analysts had been forecasting revenues of UK£1.4b and earnings per share (EPS) of UK£1.24 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 3i Group
With these upgrades, we're not surprised to see that the analysts have lifted their price target 9.0% to UK£12.10 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on 3i Group, with the most bullish analyst valuing it at UK£13.93 and the most bearish at UK£10.97 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting 3i Group's growth to accelerate, with the forecast 4x growth ranking favourably alongside historical growth of 2.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.5% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect 3i Group to grow faster than the wider industry.
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. With a serious upgrade to expectations and a rising price target, it might be time to take another look at 3i Group.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for 3i Group going out to 2023, and you can see them 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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