Medigene AG (ETR:MDG1) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
After the upgrade, the twin analysts covering Medigene are now predicting revenues of €29m in 2020. If met, this would reflect a sizeable 171% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing €18m of revenue in 2020. The consensus has definitely become more optimistic, showing a considerable lift to revenue forecasts.
Notably, the analysts have cut their price target 8.2% to €10.40, suggesting concerns around Medigene's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Medigene at €16.20 per share, while the most bearish prices it at €7.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. One thing stands out from these estimates, which is that Medigene is forecast to grow faster in the future than it has in the past, with revenues expected to grow 171%. If achieved, this would be a much better result than the 4.5% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 26% per year. So it looks like Medigene is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Medigene this year. They're also forecasting more rapid revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Medigene.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential risks with Medigene, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 3 other risks we've identified .
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.
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