News Flash: Analysts Just Made A Meaningful Upgrade To Their NuVista Energy Ltd. (TSE:NVA) Forecasts
NuVista Energy Ltd. (TSE:NVA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
After this upgrade, NuVista Energy's three analysts are now forecasting revenues of CA$1.3b in 2022. This would be a sizeable 29% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 28% to CA$1.79. Before this latest update, the analysts had been forecasting revenues of CA$1.0b and earnings per share (EPS) of CA$1.58 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Check out our latest analysis for NuVista Energy
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of CA$15.77, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values NuVista Energy at CA$18.50 per share, while the most bearish prices it at CA$13.00. 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 NuVista Energy shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that NuVista Energy's rate of growth is expected to accelerate meaningfully, with the forecast 41% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 16% p.a. 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 0.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect NuVista Energy to grow faster than the wider 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So NuVista Energy could be a good candidate for more research.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for NuVista Energy going out to 2023, 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.
