Shareholders in Baytex Energy Corp. (TSE:BTE) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the upgrade, the current consensus from Baytex Energy's three analysts is for revenues of CA$3.6b in 2023 which - if met - would reflect a major 55% increase on its sales over the past 12 months. Statutory earnings per share are supposed to plummet 37% to CA$0.99 in the same period. Prior to this update, the analysts had been forecasting revenues of CA$2.3b and earnings per share (EPS) of CA$0.91 in 2023. The most recent forecasts are noticeably more optimistic, with a sizeable gain to revenue estimates and a lift to earnings per share as well.
See our latest analysis for Baytex Energy
As a result, it might be a surprise to see that the analysts have cut their price target 6.0% to CA$7.84, which could suggest the forecast improvement in performance is not expected to last. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Baytex Energy, with the most bullish analyst valuing it at CA$10.25 and the most bearish at CA$5.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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 Baytex Energy's rate of growth is expected to accelerate meaningfully, with the forecast 55% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 15% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 2.0% per year. It seems obvious that as part of the brighter growth outlook, Baytex Energy is expected 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. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Baytex Energy.
Analysts are clearly in love with Baytex Energy at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as its declining profit margins. You can learn more, and discover the 1 other warning sign we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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March 03, 2023 at 05:22PM
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Industry Analysts Just Upgraded Their Baytex Energy Corp. (TSE:BTE) Revenue Forecasts By 58% - Yahoo Finance
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