Celebrations may be in order for Gibson Energy Inc. (TSE:GEI) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company’s business prospects.
Following the latest upgrade, the current consensus, from the seven analysts covering Gibson Energy, is for revenues of CA$10.0b in 2023, which would reflect a considerable 9.6% reduction in Gibson Energy’s sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$8.7b in 2023. It looks like there’s been a clear increase in optimism around Gibson Energy, given the nice gain to revenue forecasts.
There was no particular change to the consensus price target of CA$25.07, with Gibson Energy’s latest outlook seemingly not enough to result in a change of valuation. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Gibson Energy analyst has a price target of CA$28.00 per share, while the most pessimistic values it at CA$23.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Gibson Energy is an easy business to forecast or the underlying assumptions are obvious.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gibson Energy’s past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 9.6% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 8.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.1% annually for the foreseeable future. So it’s pretty clear that Gibson Energy’s revenues are expected to shrink faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They’re also forecasting for revenues to shrink at a quicker rate than companies in the wider market. Seeing the dramatic upgrade to this year’s forecasts, it might be time to take another look at Gibson Energy.
Analysts are definitely bullish on Gibson Energy, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including a weak balance sheet. You can learn more, and discover the 2 other risks we’ve identified, 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.
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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.
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