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Industry Analysts Just Made A Meaningful Upgrade To Their Syrah Resources Limited (ASX:SYR) Revenue Forecasts

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·3-min read
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Syrah Resources Limited (ASX:SYR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Syrah Resources will make substantially more sales than they'd previously expected. Syrah Resources has also found favour with investors, with the stock up a worthy 15% to AU$1.99 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the current consensus from Syrah Resources' dual analysts is for revenues of US$134m in 2022 which - if met - would reflect a huge 363% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$122m of revenue in 2022. It looks like there's been a clear increase in optimism around Syrah Resources, given the solid increase in revenue forecasts.

See our latest analysis for Syrah Resources

earnings-and-revenue-growth
earnings-and-revenue-growth

We'd point out that there was no major changes to their price target of AU$1.58, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Syrah Resources at AU$1.75 per share, while the most bearish prices it at AU$1.40. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Syrah Resources' past performance and to peers in the same industry. It's clear from the latest estimates that Syrah Resources' rate of growth is expected to accelerate meaningfully, with the forecast 4x annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 34% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Syrah Resources is expected to grow much faster than its industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Syrah Resources this year. The analysts also expect revenues to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Syrah Resources.

Analysts are definitely bullish on Syrah Resources, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including a short cash runway. You can learn more, and discover the 2 other concerns we've identified, for 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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