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UK£2.75 - That's What Analysts Think LoopUp Group plc (LON:LOOP) Is Worth After These Results

Shareholders of LoopUp Group plc (LON:LOOP) will be pleased this week, given that the stock price is up 11% to UK£2.27 following its latest interim results. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for LoopUp Group

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earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for LoopUp Group from three analysts is for revenues of UK£55.7m in 2020 which, if met, would be a modest 7.0% increase on its sales over the past 12 months. Per-share earnings are expected to rise 8.2% to UK£0.11. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£56.1m and losses of UK£0.01 per share in 2020. While there's been no material change to the revenue estimates, there's been a pretty clear upgrade to earnings estimates, with the analysts expecting a per-share profit compared to previous expectations of a loss. So it seems like the latest results have led to a significant increase in sentiment for LoopUp Group.

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The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 19% to UK£2.75. 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 LoopUp Group, with the most bullish analyst valuing it at UK£3.24 and the most bearish at UK£2.25 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that LoopUp Group's revenue growth will slow down substantially, with revenues next year expected to grow 7.0%, compared to a historical growth rate of 41% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.5% next year. So it's pretty clear that, while LoopUp Group's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting LoopUp Group to become profitable next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for LoopUp Group going out to 2022, and you can see them free on our platform here..

Even so, be aware that LoopUp Group is showing 1 warning sign in our investment analysis , you should know about...

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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