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Analyst Forecasts For Genel Energy plc (LON:GENL) Are Surging Higher

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·3 min read
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Genel Energy plc (LON:GENL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the six analysts covering Genel Energy are now predicting revenues of US$325m in 2021. If met, this would reflect a substantial 104% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.31 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$278m and earnings per share (EPS) of US$0.24 in 2021. 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 Genel Energy

earnings-and-revenue-growth
earnings-and-revenue-growth

Despite these upgrades, the analysts have not made any major changes to their price target of US$2.90, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Genel Energy analyst has a price target of US$2.34 per share, while the most pessimistic values it at US$1.57. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Genel Energy is an easy business to forecast or the underlying assumptions are obvious.

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. It's clear from the latest estimates that Genel Energy's rate of growth is expected to accelerate meaningfully, with the forecast 104% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 4.2% 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 5.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Genel 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 Genel 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 Genel Energy going out to 2023, and you can see them 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.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.