Organogenesis Holdings Inc. (NASDAQ:ORGO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
After this upgrade, Organogenesis Holdings' four analysts are now forecasting revenues of US$446m in 2021. This would be a solid 18% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to sink 19% to US$0.31 in the same period. Before this latest update, the analysts had been forecasting revenues of US$397m and earnings per share (EPS) of US$0.11 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
It will come as no surprise to learn that the analysts have increased their price target for Organogenesis Holdings 5.2% to US$25.50 on the back of these upgrades. 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 Organogenesis Holdings, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$24.00 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
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. We can infer from the latest estimates that forecasts expect a continuation of Organogenesis Holdings'historical trends, as the 24% annualised revenue growth to the end of 2021 is roughly in line with the 24% annual revenue growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. So it's pretty clear that Organogenesis Holdings is forecast to grow substantially faster than its 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. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Organogenesis Holdings.
Analysts are clearly in love with Organogenesis Holdings at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. You can learn more, and discover the 4 other warning signs we've identified, for free on our platform here.
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