Yahoo Finance Need To Know: Analysts Are Much More Bullish On Cogstate Limited (ASX:CGS) Revenues
Cogstate Limited (ASX:CGS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The market seems to be pricing in some improvement in the business too, with the stock up 7.1% over the past week, closing at AU$1.43. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
After the upgrade, the four analysts covering Cogstate are now predicting revenues of US$46m in 2023. If met, this would reflect a meaningful 12% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to crater 42% to US$0.012 in the same period. Previously, the analysts had been modelling revenues of US$42m and earnings per share (EPS) of US$0.012 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.
View our latest analysis for Cogstate
It may not be a surprise to see that the analysts have reconfirmed their price target of AU$1.92, implying that the uplift in sales is not expected to greatly contribute to Cogstate's valuation in the near term. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Cogstate, with the most bullish analyst valuing it at AU$2.26 and the most bearish at AU$1.31 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Cogstate shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Cogstate's growth to accelerate, with the forecast 24% annualised growth to the end of 2023 ranking favourably alongside historical growth of 14% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Cogstate to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Cogstate.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Cogstate analysts - going out to 2025, 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.
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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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