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Markel Corporation (NYSE:MKL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The stock price has risen 6.0% to US$1,283 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
Following the upgrade, the consensus from four analysts covering Markel is for revenues of US$12b in 2021, implying a perceptible 6.5% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$11b of revenue in 2021. It looks like there's been a clear increase in optimism around Markel, given the nice gain to revenue forecasts.
Check out our latest analysis for Markel
There was no particular change to the consensus price target of US$1,317, with Markel's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Markel analyst has a price target of US$1,450 per share, while the most pessimistic values it at US$1,096. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 12% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Markel is expected to lag the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Markel this year. They also expect company revenue to perform worse 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 Markel.