Yahoo Finance New Forecasts: Here's What Analysts Think The Future Holds For Codan Limited (ASX:CDA)
Codan Limited (ASX:CDA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Codan has also found favour with investors, with the stock up a worthy 25% to AU$15.55 over the past week. Could this upgrade be enough to drive the stock even higher?
After this upgrade, Codan's five analysts are now forecasting revenues of AU$422m in 2021. This would be a meaningful 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 23% to AU$0.51. Before this latest update, the analysts had been forecasting revenues of AU$382m and earnings per share (EPS) of AU$0.47 in 2021. Sentiment certainly seems to have improved in recent times, with a decent improvement in revenue and a modest lift to earnings per share estimates.
See our latest analysis for Codan
It will come as no surprise to learn that the analysts have increased their price target for Codan 26% to AU$15.27 on the back of these upgrades. 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. There are some variant perceptions on Codan, with the most bullish analyst valuing it at AU$16.60 and the most bearish at AU$11.20 per share. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Codan's past performance and to peers in the same industry. It's clear from the latest estimates that Codan's rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 17% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Codan 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Codan could be worth investigating further.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Codan analysts - going out to 2024, 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.
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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