SDI Group plc (LON:SDI) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's forecasts. The analyst has sharply increased their revenue numbers, with a view that SDI Group will make substantially more sales than they'd previously expected. SDI Group has also found favour with investors, with the stock up a notable 15% to UK£0.99 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After this upgrade, SDI Group's solitary analyst is now forecasting revenues of UK£33m in 2021. This would be a substantial 34% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 31% to UK£0.035. Prior to this update, the analyst had been forecasting revenues of UK£29m and earnings per share (EPS) of UK£0.034 in 2021. The forecasts seem more optimistic now, with a substantial gain in revenue and a slight bump in earnings per share estimates.

See our latest analysis for SDI Group

With these upgrades, we're not surprised to see that the analyst has lifted their price target 14% to UK£1.25 per share.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analyst is definitely expecting SDI Group's growth to accelerate, with the forecast 34% growth ranking favourably alongside historical growth of 25% per annum 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 6.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that SDI Group is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that the analyst appears to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at SDI Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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