Earnings momentum can be a powerful factor driving the performance of company shares.
Stocks experiencing upward revisions to earnings estimates tend to outperform the market while those experiencing downgrades tend to underperform.
A recent example is animal genetics company Genus, which said on 14 July that trading in the second half was better than it was anticipating. Consequently, it flagged pre-tax profit for the year which ended in June 2026 would likely come in at around £98 million, compared with market expectations of £95.5 million.
Many companies publish market expectations on their websites, and it is generally based on an average of analysts’ forecasts, which is referred to as the consensus.
Following the update analysts at Berenberg said: “We raise our 2026 profit forecast to the new guidance, prudently leaving outer years unchanged.”
Note, the analysts gave notice of further upgrades but chose to keep their powder dry, in the interests of prudence. This is a common practice among the analyst community.
How do earnings revisions work in practice?
If analysts upgrade their estimates following earnings results, this increases the consensus estimate.
However, analysts do not always immediately upgrade their forecasts. This can take a few weeks as they update models and conduct further research.
What this means is that new information is digested slowly and earnings expectations tend to drift upwards gradually.
There is also a ‘herding’ effect going on, with analysts tending to follow each other. This means a single upward revision can act as a catalyst for multiple upgrades.
It is understandable that companies experiencing positive business momentum and receiving upward earnings revisions might appear more attractive to investors.
As estimates get revised up, a stock’s forward PE (price to earnings) ratio falls if the price remains the same, making it look cheaper, everything else being equal.
Searching for the strongest revisions
We have crunched the data to find companies which have seen their consensus earnings estimates revised up the most over the last three months.
Only companies which have at least four analysts producing estimates have been included to reduce the effect of outliers, and we restricted the list to companies with a market value of at least £250 million.
Debenhams eyes earnings inflection
Boohoo, which trades as Debenhams, saw a strong increase in consensus forecasts following its first quarter trading update on 3 June when the distressed retailer confirmed momentum in its multiyear turnaround plan was accelerating.
“With the cost out ahead of plan and strong momentum carried into the year, the Board's confidence has grown, and we are reiterating our guidance of double-digit Adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) growth in the financial year to February 2027,” the company said.
Analysts have rushed to update their models resulting in expected losses for 2027 of around £15 million turning into profits of just over £8 million.
Polar Capital knocks it out of the park
The boutique fund manager revealed record assets under management which grew 43% year-on-year to £30.6 billion, driven by strong fund performance and almost $1 billion of inflows.
Momentum continued into the new financial year with assets under management reaching £44.7 billion as at 19 June, 2026.
The strong increase in earnings revisions continues a longer-term trend which has seen consensus earnings estimates for the year to March 2027 revised up by 80% over the last 12 months.
Investor interest in the AI theme has provided a structural tailwind for Polar Capital, but it is worth noting that the company flagged concentration risk with technology-focused strategies now accounting for 55% of group assets.
Is BP seeing a one-off benefit?
Oil and gas majors are expected to see a bump in 2026 earnings due to the jump in oil prices linked to the war in Iran and the closing of the Strait of Hormuz.
BP has provided a rule of thumb sensitivity to changes in the price of Brent crude. A $1 change in the price is anticipated to impact pre-tax underlying replacement cost operating profit to the tune of $340 million.
While consensus estimates have been revised up by a around a third over the last few months, analysts anticipate 2027 earnings to be around 20% lower than 2026’s outcome.
Halfords moves into top gear
The bikes and car parts provider projected 2027 profit towards the top end of analysts’ expectations on 25 June, after reporting full year profit ahead estimates.
Halfords shares jumped 20% taking year-to-date gains to 71%, although they are still around a third below the post-pandemic e-bike boom highs of close to 400p.
Following the unexpectedly strong full year trading update analysts have been busily upgrading their 2027 forecasts. Analysts at Panmure Liberum believe the profit upgrade implies a 6% to 8% increase in consensus estimates. “Topline [revenue] momentum is strong here and with operating cost headwinds now fading, upgrades feel inevitable,” they comment.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
